Week #4 EDLD 5342 Part 5

     Our school district has developed a relationship with the same auditing firm for several years, and when I interviewed our Interim Superintendent, he described the process that they use to review thoroughly the finances of the district. He explained the timeline of the budget process and the steps that we take in order to select an external auditor. Although, our school board has chosen the same external auditing firm for several years, we still go through the process of accepting bids for others. He also mentioned that while it may be a more efficient use of time and that it is advantageous to have a strong relationship with the auditors; it is still a best practice to gain the perspective from different external auditors. He discussed the timeline when the external auditors come in to the district of when they come in and the documents that they review.

     In the fall, the auditors come on site and review several documents. After an initial review, they request in writing very specific documentation. Often this is for clarification of items about which they have questions. Items that they have requested to review have been anything pertaining to fund balances, accrued interest, fixed asset inventories, ledgers for maintenance and food service, payroll quarterly reports, reports submitted regarding federal monies, lists of legal expenditures, copies of budget for current fiscal year, insurance coverage documents, and copies of un-liquidated encumbrances/purchase orders.

     According to the guidance document published by the Texas Education Agency, there are some considerations listed for school districts in order to prepare for the audit. Auditors review various aspects of the school’s financial dealings such as, cash, investments, accounts receivable, inventories, capital assets, accounts payable, liabilities, fund balances, earnings, revenues, expenditures, property taxes, insurance, and budget. Being aware that the audit is comprehensive, school personnel can prepare documents for the auditors before they arrive. While they review all pertinent documentation, they are also very informed on compliance and changes that may have occurred in the law. They also are able to conduct interviews, but often they will send out anonymous questionnaires to various staff members with specific procedures to maintain confidentiality.

     I was also allowed to review the report from the fall of 2010, and then he explained that results are communicated to him in the form of a comprehensive report. For each indicator, a summary is offered followed by a page that may or may not have ‘findings’ listed. A finding is something that you do not want to see. This would be an area of concern, perhaps a guideline of compliance component that was not followed appropriately. Guidance is offered to the district for corrective action. The school board reviews the report, and a response to the finding is given the following year. In other words, progress towards the corrective action must be attained so that the district is in compliance with that particular aspect of the finding.