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8 Tips for a painless school audit


image of b&w school busby Joel C. Kreider

The prospect of the annual school district audit can send dread through the most I-dotting, T-crossing accountant and business manager.

As a seasoned auditor, I offer these eight smart ways to help take the pain out of the process, prepare for what may be months and 300-plus hours of audit work, and ultimately provide a financial report that will assist with the necessary Annual Financial Report (AFR) requirements and aid with future planning.

An audit will help, not hurt, your operations. It can protect and be a deterrent against fraud as the district’s internal controls are assessed and documented through the audit, guides decision-making through substantiated financial information, and demonstrates a commitment to accuracy and fiscal responsibility. It validates the hard work you do every day, every year.

Here’s how to achieve that stamp of approval with minimal angst:

1. Know your arrangement letter.

Not only read the terms of engagement, but also ask questions. Whether you receive a financial statement audit and a separate compliance audit, (Single Audit – for school districts expending more than $750,000 in federal funds in a single year) make sure you know the scope of the audit, the responsibilities of the auditor and the district, the fees, the timeline, and more.

2. Set and honor deadlines.

The audit really begins before year’s end. Ideally, send a trial balance for all funds to the auditor a few days before year-end fieldwork, prepare workpapers before the auditor’s arrival and discuss preparation expectations. Specify when final statements are due and final board meeting dates.

3. Embrace technology.

Auditors may use a planning letter to detail the engagement, but nowadays, a web portal workflow program will probably be used to transform the planning letter into a request list. You can then upload documents more efficiently and securely.

4. Know what you need in each phase of fieldwork

  • •Before interim fieldwork: Review and update your organization’s internal control narratives and provide all lease arrangements, collective bargaining and other employment agreements, and notice of substantial changes that affected the district, such as legal issues, a capital project, or turnover in the business office.
    Provide testing selections, which are usually disbursement, cash receipt and payroll ledgers for the entire year, and for each fund. Prepare confirmations for delinquent real estate, earned income and other taxes. Although no two years nor two audits are precisely alike, it is helpful to use last year’s checklist as a guide, remembering any new bond issues, new cash depository accounts and more.
  • During interim fieldwork: In this time, work includes the testing of internal controls, and the testing of disbursements, receipts and payroll, along with smaller fund tests, such as food service revenue and student activity receipts. Also, preliminary fixed asset testing can begin at this time — this process can often get overlooked. Auditors should also schedule meetings with key personnel, such as the school superintendent, business manager and school board president.
  • Year-end fieldwork: This is the red meat of the process. A well-prepared and reconciled set of books will mean overall less testing, fewer paper documents, and minimal tension in the business office. If the school district finds that a deadline will be missed, communicate the delay and re-address it in the timeline next year.

5. Know your Balance Sheet.

Cash reconciliations, account reconciliations, supporting documentation, accrued payroll reports and more are critical items supporting the balance sheet. Districts that have a firm grasp on all balance sheet accounts and the underlying amounts typically have smoother audits.

6. Remember your long-term assets and liabilities.

If you delay the additions, disposals, and updating of the fixed asset system, audits tend to be delayed. Maintain building projects separately and remember to book retainage. Maintain a summary of all debt activity and show an amortization schedule for debt, maturity dates, premium and refunding loss amortization. Address changes in contract agreements for sick, vacation and personal leave.

7. Complete your income statement accounts.

Prepare a real estate roll-forward, track all state grants, and discuss expectations on your salary expense analysis. If the district is required to have a Single Audit, a completed Schedule of Expenditure of Federal Awards (SEFA) is paramount. The auditor should provide a clear, concise list of every document needed for the programs to be tested and personnel to be interviewed. The Single Audit represents the one area where audit findings tend to originate, so it is critical that district personnel understand all grant requirements.

8. A successful conclusion.

When auditors leave the field, don’t allow them to be “out of sight, out of mind.” The district and audit team should communicate outstanding items to take care of – such as footnote disclosures, for example. The district must comply with the time constraints of getting the Annual Financial Report (AFR) prepared as well as the Management Discussion and Analysis (MD&A) for the financial statement. The auditor will prepare the management letter and audit findings and discussed them with management. There should be no surprises because communication should be ongoing throughout.

In the end, an audit process can be smooth sailing if you are prepared to navigate the journey.

Joel C. Kreider, CPA, is a director at Boyer & Ritter LLC, and a senior member of the Government Services Group and works frequently with school districts. Contact Joel at 717-761-7210 or


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