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Taking the Fear Out of Your AuditA guide to selecting your auditor and

preparing for your audit

Neal Renuart, CPAAudit Partner

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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.

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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

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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

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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

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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

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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.

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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.

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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.

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Preparing for Your Audit

• Planning

• Interim field work

• Final field work

• Report creation and issuance

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Planning

• Client assistance/request list

• Advance preparation, meetings and discussions

• Designating a primary audit contact person

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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)

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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

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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

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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

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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

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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

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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

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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

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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

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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

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Resources• RFP Sample

• http://www.floridacharterschools.org/public/taps.asp

• TAP• http

://www.floridacharterschools.org/public/charterschoollawandcompliance.asp

• Florida Consortium of Public Charter Schools• http://www.floridacharterschools.org/index.asp

• Charter School Alliance• http://www.flcharteralliance.org

• BKHM Charter School Website and Blog• http://www.bkhmcpa.com

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Questions?

Contact Information:

Neal Renuart, CPA1560 Orange Avenue, Suite 600Winter Park, FL 32789407-998-9000Email: nrenuart@bkhmcpa.comWebsite: www.bkhmcpa.com

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Thank You