Interview with Business Manager for District

Week 4, Assignment 5

Interview with Business Manager on Financial Audits.  Below are the questions asked of the Business Manager:

1) How is the external auditor selected?

2) How does the auditor conduct the audit?

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

4) How are the results communicated?

The auditor’s final report has the following components:

Audit procedures used

The organization-wide audit encompasses the financial statements as required by GASB Statement No. 34 and the Texas Education Agency Financial Accountability System Resource Guide for the fiscal year being reviewed.  The audit is performed in accordance with generally accepted auditing standards and generally accepted government auditing standards contained in the Texas Education Agency Financial Accountability System Resource Guide.

The procedures used are to determine whether (1)  the financial statements present fairly the financial position, results of operations, and cash flows or changes in financial position in accordance with generally accepted accounting principles, and (2) whether the District has complied with laws and regulations for those transactions and events that may have a material effect on the financial statements.

The financial related audit will also include determining whether (1) financial reports and related items are fairly presented, (2) financial information is presented in accordance with established or stated criteria, and (3) the school district has adhered to specific financial compliance requirements.

The audit will also include obtaining an understanding of the school district's internal control processes and reporting any significant deficiencies or material weaknesses relating to the internal control system coming to the attention of the auditors.

As part of the audit of the financial statements, transactions and records pertaining to federal programs will be tested for material compliance with federal laws, rules, and regulations and all instances of noncompliance will be reported to the school district.

Items Reviewed

The auditors will review items such as,

(1) Check registers

(2) Legal costs to determine potential future liability from any legal action

(3) Procurement procedures, including bids and purchase order processes

(4) Federal notices of grant awards, monthly drawdowns, expenditure reports, program reports, and time and effort documentation

(5) Payment procedures ensuring all required approvals and documentation support payments processed

(6) Sources of federal, state and local revenue, with recalculations to ensure amounts are properly recorded or accrued

(7) Campus and district improvement plans

(8) Warehouse and student nutrition inventory procedures and balances

(9) General ledger account reconciliations, such as bank account reconciliations

(10) Technology system security and preparation of data in event of a loss of servers or power in district buildings

(11) Payroll checks, processes, and documentation of semi-monthly payroll

Finding of Audit

As auditors are reviewing processes, documents and procedures of the organization, recommendations or 'findings' will be noted and reviewed with management at the exit conference and then presented to the Board of Trustees and documented in the Single Audit Report.  These audit findings are noted to make the district aware of deadlines that were found to not be met during the year, procured that weren't followed, or internal control processes that were lacking that could leave the district vulnerable of theft or loss.  These findings are noted in the report in a section labeled Schedule of Findings and Questioned Costs.

Future Recommendations

In addition to the auditors communicating their findings, they must also include their recommendation on how the finding could be resolved in the future.  This information will also be found on the Schedule of Findings and Questioned Costs located in the Single Audit Report.