Website-IASBO-SBOA-How-to-prepare-for-an-audit.pptx
- 1. How to Prepare for an Audit Ryan Preston And Chase Lenon
- 2. Requirements Indiana Code 5-11-1-9 Requires the state examiner to examine all accounts and all financial affairs of every public entity IC 5-11-1-25 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 • 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!
- 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
- 8. Identify Risks •Risks Associated with Significant Audit Areas •How Unit has Addressed Risks •How it Will Effect Audit Procedures Performed
- 9. Testing •Internal Controls • 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
- 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
- 11. 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 • Who is Invited • What is Discussed • Request Auditee prepared schedules • Federal Findings Corrective Action Plans • Options to Respond • IC 5-11-5-1.5 • 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?
Editor's Notes
- #5: 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
- #7: School officials will be asked to provide school board meeting minutes and could be asked to complete a Unit Environment questionnaire
- #9: 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: 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.