Charter School Audit Preparation and Best Practices

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Charter School Audit Preparation and Best
Practices
November 19, 2009
Carla McCall, C.P.A. Charles Webb, C.P.A. Marion
McDaid
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Agenda

• Compliance
• Audit areas
• Helpful hints to audit preparation
• Frequent audit adjustments
• Audit wrap up
• Foundations
• Compliance requirements - A-133

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Detailed Compliance Testing

• Review auditor compliance selections prior to
  testing (Exhibit 1)
• Payroll files and required documentation
• Check for proper documentation, approvals and
  support for cash disbursements
• Communicate any issues in advance
• Employee reimbursements and stipends
• Internal audit during the year
• Utilize checklists for required payroll documents
  (Exhibit 2)
• Perform internal audit on a sample of
  disbursements

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MA DESE Compliance Supplement

• Exhibit 3
• http//finance1.doe.mass.edu/charter/charter_audit
  _guide.doc
• MTRS
• Withholding must be remitted to state by 10th day
  of following month
• Withholding of correct percentage
• MGL Chapter 32 MTRS
• Become familiar with MTRS guide (Exhibit 4)

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MA DESE Compliance Supplement

• Locate required policies
• (required policies requirement) Student code of
  conduct, enrollment policy, criminal background
  checks, complaint procedures, (Occupancy)
  multi-hazard evacuation plan, occupancy permit,
  safety/fire inspection certificate, evidence of
  insurance coverage
• Certification of procurement officer
• Limited class offerings
• Implement as part of policies and procedures
  manual in the event of Business Manager turnover

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MA DESE Compliance Supplement

• End of year financial report
• Have supporting documentation prepared
• Student Information Management System (SIMS)
  reports and internal attendance/enrollment
  reports
• Internal controls memo
• Public Meetings
• MGL c30A, section 11A ½, Open Meetings of
  Governmental Bodies (Exhibit 5)

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Audit Areas

• Entitlement grants
• Revenue recognition
• End-of-year receivable
• Budget-to-actual comparison
• i.e. QuickBooks class reports
• Recording MTRS portion of entitlement grants
• Drawdown period
• Tracking (Exhibit 6)

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Audit Areas

• Temporarily restricted net assets
• Tracking and internal reporting
• Treatment of private grants and contributions
• General revenue vs. Operating revenue

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Audit Areas

• Tuition revenue
• http//finance1.doe.mass.edu/charter/charter09_rat
  es_jun_chasum.xls
• Program revenues and fees
• Internal control documentation and fraud risks
• Year-to-year analysis
• Legal expenses
• Credit cards

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Helpful hints to audit preparation

• Provide schedules in advance
• Have supporting documentation ready
• Make the audit process a year-round process
• Monthly closing checklist (Exhibit 7)
• Communication throughout the year
• Record keeping
• Strong, detailed analytics!
• Prepare the MDA early

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Frequent Audit Adjustments

• MTRS associated with entitlement grants
• In-kind goods and services
• Transportation
• Legal and other professional fees
• Accrued payroll
• Debt related
• Amortization or recording of financing and other
  fees associated with debt acquisition
• Accrued interest

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Audit Wrap Up

• Contact Finance and Audit Committee Members early
  for meetings
• Request and review draft financial statements as
  early as possible
• Representation letters and Board Acknowledgement
• Approval of audit

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Foundations

• Considerations in establishing foundations
• Debt
• Fundraising (private foundations)
• Building acquisition
• Type of Foundation IRS purposes - Type I, II,
  III
• Revenue recognition and receipts of private
  awards
• Grants to School
• Allocation of costs
• Intercompany balances
• Allocation of fixed assets
• Tax return preparation issues

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Compliance Requirements A-133

• Government Auditing Standards Audit
• Requirements and testing
• OMB Circular A-133 Audit
• Requirements and thresholds
• Reporting (National clearinghouse)
• Preparation and planning
• Catalogue of Federal Domestic Assistance (CFDA)
• Compliance supplements
• Timesheets
• Reporting requirements

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Questions Comments
Carla McCall, CPA Charles Webb,
CPA 508-366-9100, x 3049
508-366-9100, x 3033 21 East Main St.,
Westborough, MA 01581 (fax) 508-366-9789