Prepare for Your Audit! Step 4: The Main Audit.
By EdTec Staff
August 8, 2018
You’ve selected an auditor, communicated with them frequently, and completed the pre-audit steps. Now it’s time for The Main Audit. This phase involves all information as of the fiscal year close and occurs between August and November. During this stage the audit firm will perform fieldwork at your school and request sample financial transactions from the school administration.
During the pre-audit or interim audit, most audit firms do as much as possible for items not dependent on the fiscal year being closed. Now is the time to tackle the information as of fiscal year close.
Pay close attention to:
- Financial activity immediately following the close of fiscal year
- Information and how it has or has not changed from the unaudited actuals
- Subsequent events, all important financial or relevant school events that occur after year end
School administrators should be prepared for the auditors to test financial information by selecting a sample of transactions and requesting back-up (invoices, receipts), as well as perform procedures on financial statement balances. The auditors will ask for specific documentation to provide evidence that the school is following all necessary policies. Take the time and effort to organize all your financial information and back-up ahead of time so that everything is readily available upon request.
You should expect your auditor to do fieldwork during late Summer or Fall either at your school or at the office of your back office provider (such as EdTec), if you are using one. The in-person work usually takes around 2-4 days. Nowadays, with a lot of information being stored on internet accessible platforms the need for fieldwork is beginning to diminish. Confirm the plan with your auditor and establish when and how the fieldwork will take place.
How Do You Facilitate?
During the pre-audit, you should have created a plan that outlines how you will provide information to the audit firm. Stick to that plan. If possible, try to create an electronic share space to place your school’s financial information and make it available to the audit firm. This ensures an organized and expedient way to share information.
If your audit team is coming to your school location, a dedicated physical space for the auditors is crucial. Take the time to set aside a room or space and confirm that it will be available when the auditors visit.
The audit firm will generate requests for more information as they are conducting testing. It’s important to be responsive to prevent holding up the process or requiring them to stay on site longer than necessary.
Example for CA Charters: Auditing the LCAP
The auditors will begin by selecting an action or service from the LCAP that your school (LEA) has identified as having expenditures.
You will then be responsible for guiding the auditor as to how they can find those certain expenditures in the general ledger.
Having all your documentation and back-up clearly organized and accessible will ensure the main audit runs as smoothly as possible.
Auditor’s Next Steps
Even when fieldwork is over, there’s still a lot of work for the auditors to complete. They need to follow up with outstanding items or tests being conducted after the main fieldwork and organize audit work and documentation. They also need to prepare a list of audit adjustments, if any are required, double-check all work, and conduct peer and partner review of work papers. Lastly, the auditors will provide a draft of the financial statements for your review.
When discussing timeline with the contracted audit firm, it’s important to make sure this time-frame is discussed and included in planning.
If you have done a good job communicating with your auditor during the pre-audit and have your files ready to share for testing, the main audit should take place without any unexpected setbacks. Be prepared to discuss any changes from the unaudited actuals and explain financial activity following the fiscal year close. Remember to have a space dedicated for your auditors and work hard to response to their requests quickly. The faster the main audit can be completed, the easier for all parties involved and the less likelihood of having issues.
Stay tuned for our next and final article on the audit cycle, the Audit Report Review and Submission!
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