Week 4 Part 5 Financial Audits

Week 4 Part 5

Financial Audits

When school districts are creating their budgets for the upcoming school year, the budget must be audited. The purpose of the audit is to make sure the system is managed and operating correctly. I interviewed Mike Singleton, CFO for the Rockwall I.S.D. to discuss the annual external financial audit. I asked Mr. Singleton several questions pertaining to the annual external audit.

How is the external auditor selected?

The new Superintendent for the Rockwall I.S.D. wanted to seek new auditors for the district. The contract for the previous auditors had expired. The first step is to request for proposals. The request for qualifications is to select an auditor based on CPA ethics and professional services, not fees. The candidates were narrowed to three and face to face interviews will take place. Once the new auditing firm is selected, the school board will have to approve the selection.

How does the auditor conduct the audit?

The new auditor will meet with the Superintendent and CFO. During this meeting they will discuss the timeline of the work to be done. The auditors will spend time with the district finance office conducting preliminary field work. This process will take two to three weeks. The auditors will return in August to conduct field work in the financial office. Once the auditors have completed the field work, they will provide the district with a report stating their opinion about the financial operation.

What does the audit conclude about district financial procedures and actions?

This process will take about five weeks. The intent of this audit is to determine if the financial statements are reasonable and materially correct. The auditors will conduct tests that will measure the accuracy. The auditors will observe and test internal controls to make sure that transactions are properly handled. The system is tested to identify material weaknesses. If the auditors find a problem during the audit, the auditors will report to the Superintendent, CFO, and School Board. State and Federal grants will also be observed. The auditors will look to see if the district is using funding properly. The auditors will give their opinion and assurances about the system overall.

How are the results communicated?

The auditors will provide the district with an annual financial report. This report will state their assurances and opinions concerning the district’s financial operation. The auditor and the CFO will present the findings to the Board of Education in December. The district will submit a copy of the audit to the Texas Education Agency.

Reflection:

The annual external financial audit is a very important process. The purpose of the audit is to observe and test the district’s financial operations. The audit is very thorough and detailed. The process takes several months to conduct. The auditors conduct field test that measure all areas of the finance department. This audit is reassurance to the community that funds are managed and handled properly. During this process, the auditor will report to the Superintendent, CFO, and school board if any weaknesses are found in the system