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Taking the Fear Out of Your Audit A guide to selecting your auditor and preparing for your audit Neal Renuart, CPA Audit Partner
Disclaimer No material in this presentation workshop is intended to be nor should it be construed as legal advice. If you have specific questions pertaining to your school, please consult your school’s attorney.
Welcome/Agenda How to go about selecting your auditor The importance of selecting a quality auditor What is an audit? The audit process Auditor vs. management responsibilities Reports issued after audit
Finding a Firm to Bid on Your Audit Technical Assistance Paper – Auditor Selection Process Send out your RFP (Request for Proposal) to at least 3 firms and keep proof that you have sent it out (you do not have to get 3 bids back) Start the process early – try and select before the school year is over or even in the spring
Finding a Firm to Bid on Your Audit (cont’d.) Where to find firms to submit your RFP to: Florida Consortium of Public Charter Schools Florida Charter School Alliance Attend the charter school conference and meet the firms who attend Search the Florida Auditor General site and review other school’s audit reports to see who they used
Importance of Selecting a Quality Auditor Sample RFP at the consortium website Important things to consider: You want someone that will be your partner and not just your auditor that you see once a year Ask about what your auditor does to help you become and stay in compliance How are they proactive in assisting their clients and ultimately you
Selecting Your Auditor Note that the Board must vote on and approve the new audit firm. Board members should think about their fiduciary duty to the school as a Board member and consider all relevant facts, firm qualifications and quality of the audit to be received and not focus solely on fees.
What does an audit of a charter school entail? An audit of a charter school is made up of two components: A financial audit A compliance audit A financial audit is the examination of financial statement information for the purposes of expressing an opinion on the fairness with which they present the school’s financial position and results of operations in conformity with generally accepted accounting principles. A financial audit provides reasonable assurance that the financial statements are free of material misstatement.
What does an audit of a charter school entail? (cont’d.) The compliance portion of a charter school audit ensures that each charter school is meeting the requirements of over 100 different Florida Statutes. These compliance requirements range from ensuring that your student files contain the required ESE designation supporting documents to Board members obtaining their required training to submitting your school’s parent liaison contact information in writing to each students’ parent or guardian.
Preparing for Your Audit Planning Interim field work Final field work Report creation and issuance
Planning Client assistance/request list Advance preparation, meetings and discussions Designating a primary audit contact person
Client Assistance List Be prepared! Pull all information requested before the auditor arrives Make sure books and records are closed and final Provide information in electronic format, when possible If you do not understand something the auditor requests, just ask (again, before the auditor arrives)
Designated Audit Contact Designate one primary contact for auditor to communicate with Put one person in charge of pulling client assistance information Make the audit requests a priority and be available for questions during the audit This makes it easier to get any audit issues resolved timely
Who Should be Involved? Board of Directors/Audit Committee Responsible for oversight Management/Administration Responsible for day-to-day activities and proper financial reporting Accounting Staff Provide supporting documentation for audit
Interim and Final Fieldwork Have school staff available during fieldwork to answer questions and gather additional items requested The better prepared you are before they arrive, the easier and smoother everything goes – it is worth it to invest the time and effort up front If you received/expended more than $500,000 in federal funds/grants, you will need a special additional audit commonly referred to as A-133
Report Creation and Issuance Who should review and approve the draft of the financial statements and compliance report? Discuss any audit adjustments and make sure they are understood before agreeing to them Discuss any compliance findings Write your explanation or rebuttal letter
Auditor’s Responsibilities To express an opinion on the financial statements – and to report on compliance matters To provide reasonable assurance that the financial statements are fairly presented To obtain an understanding of the client’s internal controls sufficient enough to plan the audit Tests of controls are not required
Management’s Responsibilities To make all management decisions To establish and maintain internal controls for monitoring activities, selection and application of accounting principles and fair presentation of the financial statements To meet compliance requirements throughout the school year To design and implement controls to prevent and detect fraud
Finalizing the Audit Drafts provided to the Board or management to approve Management representation letter (MRL) Subsequent events representation Approval, signed MRL and subsequent events update requirement before final audit can be released
Management Representation Letter Management’s acknowledgement of its responsibility for the financial statements May contain specific representations unique to each organization (for example, OMB A-133) Should be signed by persons primarily responsible for financial reporting
Reports Issued Audit Report Basic financial statements and notes Supplementary Information Management’s Discussion and Analysis Other Required Supplementary Information (such as budgetary comparison schedules) Report on Internal Control and Compliance Management Letter SAS 114 – Required Communication to Management
Reports Issued (cont’d.) SAS 114 – Required Communication to Management If Applicable; Special A-133 Reporting Schedule of expenditures of federal awards Report on compliance with major program(s) Schedule of findings and questioned costs
Resources RFP Sample TAP mpliance.asp mpliance.asp Florida Consortium of Public Charter Schools Charter School Alliance BKHM Charter School Website and Blog
Questions? Contact Information: Neal Renuart, CPA 1560 Orange Avenue, Suite 600 Winter Park, FL Website: