Alpine School District officials said that Tuesday's audit report on the 1989-90 comprehensive annual financial report makes them feel like a peach in a microwave oven - "fuzzy and warm."

"The district is in sound financial shape," Superintendent Steven Baugh said. "Our expenditures have been made according to the law and good financial decisions. We should be proud and those responsible should be commended."Business Administrator Jack McKelvy said credit for the good financial report goes to the Alpine School Board and district personnel.

"We could not get this done without those employees and their dedication," McKelvy said.

The report, put together by the district's audit committee, is a financial summary of the fiscal year beginning July 1, 1989 and ending June 30, 1990. It was reviewed by an independent auditing team from the accounting firm of Squire and Co.

Tim Larsen of Squire and Co. said auditors spent 750 hours reviewing the district's records, accounting procedures and internal controls. The financial controls, fixed assets, school lunch programs and attendance records of 17 district schools were audited.

Larsen said the firm also audited the district for the state and federal government to see if the district is using grant money appropriately. He said the audit revealed that the district is using good accounting practices and is following all laws pertaining to expenditures and disclosure.

He commended the district for receiving two certificates from national finance organizations for excellence in last year's financial reports. He said only about 5 percent of school districts receive such awards and only three Utah districts were honored.

"Very few districts in the nation received certificates," Larsen said.

The auditing team made four recommendations for improving the district's financial reporting. They favored reducing each school's petty cash fund, which the district is in the process of doing.

They suggested conducting audits of fixed assets throughout the year instead simultaneously. District officials said a rotation schedule of schools to be audited will be established.

Auditors recommended more thorough review of internal control at the district warehouse. They said the warehouse is an area of high vulnerability. District officials said the warehouse will be reviewed more regularly.

Larsen said the district also needs to be reminded that future financial reports will have to contain measurements of liability for retirement health benefits. He said ways of measuring that liability have not yet been determined but will be in the near future. District officials said a limit on retirement health benefits may have to be included in future negotiations. The cost of the retirement health benefit has risen from $12 a month per employee to $72 a month.