1. How to Prepare for an Audit
Ryan Preston
And
Chase Lenon

2. Federal Grant Agreements
Requirements
Indiana Code
Requires the state examiner to examine all accounts and all financial affairs of every public entity
IC sets the School audit schedule as Biennial
Federal Grant Agreements
Grant Agreements commonly call for an annual audit, but Indiana Schools are generally exempt because of a Grandfather clause from 1986
Debt Covenants and Bond Rating Agencies
Most financial institutions and bond rating agencies accept the SBOA audit report for their purposes

3. Types of Engagements Single Audit Financial Statement Audits
Required for Schools that exceed the threshold of federal grant expenditures
Financial Statement Audits
Required for Schools that have outstanding debt
Compliance
Required for ECAs where we have determined specific compliance needs to be reviewed, or are assessed a High risk level
Centralized Compliance
Required for ECAs that are assessed at a Moderate or Low level of risk
Special Investigation
Required for Schools in which the SBOA had determined a need to review specific areas for a specific time period

4. Goals Provide Reader Opinions on Information Presented by Auditee
Provide Reader with Noncompliance of Federal Requirements for Major Programs and State Requirements
Provide Management with less Significant Noncompliance of Federal and State Requirements

5. Entrance Conference Examiners should explain objective of engagement.
Testing for non-compliance, obtaining assurance if applicable…
Explanation of Management’s responsibilities
Informing management of fees, records to be requested, estimated timeline of engagement…
Please ask any questions if you are not clear on anything the examiner provides or requires!
Who is invited
Those Charged with Governance – Normally School Board President
Management – Normally the Fiscal Officer (Treasurer) and the Superintendent
What is discussed
Introduction to the Field Examiners that will be working on the audit
General overview of: Audit Objectives; Management Responsibilities; Audit Procedures (General, Internal Control, Compliance); Informing Management of general records that will be requested; When audit will begin and the expected issuance date
Continuing Expectations
Provide and inform attendees with a method to allow for continued communication throughout the audit process

6. Financial Statements
FE will present the fiscal officer with the compiled financial statements, notes to financial statements, and Schedule of Federal Expenditures
FE will request fiscal officer to review and complete the Form 13

7. Understanding the Unit
FEs will inquire or investigate the key employees in conducting the school financial functions
FEs will determine the general environment the school is existing in and what procedures and processes are in place that allow the School to operate
Unit could be asked to complete/update an SBOA Form 7 questionnaire
School officials will be asked to provide school board meeting minutes and could be asked to complete a Unit Environment questionnaire

8. Identify Risks Risks Associated with Significant Audit Areas
How Unit has Addressed Risks
How it Will Effect Audit Procedures Performed

9. Internal Controls Substantive Testing
Policies and Procedures that have been instituted will be tested to ensure that they are sufficient and are working
Substantive
FEs will perform audit steps to determine if financial statement information is materially correct
FEs will request documentation for processes like collections, payments, etc.
FEs will request things like bank reconcilements and ledgers, will also test things like receipts, claims, payroll

10. Federal Program Audits
Schedule of Federal Expenditures
Information input into Gateway Annual Financial report
Selection of Major Programs
Based on dollar amount threshold and Risk Based Assessment
Audit of Major Programs
Audit procedures performed to determine compliance with federal grant requirements
FEs will test internal controls and substantive applicable federal compliance requirements like allowable costs, reporting, eligibility, cash management, level of effort, period of performance, procurement/suspension/debarment, program income, special tests and provisions.

11. What has Happened After the Audit Period?
Subsequent Events
What has Happened After the Audit Period?
Debt Issuance
Significant Change in Financial Situation
Consolidation

12. Concluding Fieldwork Determine Opinions
Compile Findings and Audit Results and Comments
Request Auditee prepared schedules
Status of Prior Audit Findings
Compile Management Letter Comments

13. Exit Conference Request Auditee prepared schedules Options to Respond
Who is Invited
What is Discussed
Request Auditee prepared schedules
Federal Findings Corrective Action Plans
Options to Respond IC
State Corrective Action Plans for all repeat federal findings and repeat Audit Results and Comments

14. What Not To Do Panic! Try to hide things –we are here to help!
The auditor should be viewed as a resource, not an adversary.
Be afraid to ask questions.
Try not to look at an audit as something to complicate your life!
An audit is a irreplaceable tool to ensure your finances are in order.

15. Questions?