By the EdTec Client Management Team
December 12, 2017
An audit is an official, independent review of your charter school’s financial statements by an approved CPA. An annual audit is required of charters in most states.
There is much preparation required before the annual audit. The timeline below breaks up the charter school audit cycle into multiple phases and includes suggested dates. In today’s blog post, we’re going to focus on the first phase, Auditor Solicitation, which all schools should ideally start preparing for in September. If you’re not there yet, there’s still time – but you should start now!
Charter schools must select an auditing firm at a publicly noticed board meeting, and contract with the selected audit firm by April 1 of the current fiscal year (e.g. you need to select an audit firm for the fiscal year ending June 30, 2018 by April 1, 2018). Before this can be done, a charter school’s board must issue a request for proposal (RFP) from auditing firms. You can find sample RFPs for audit services online, or ask your local charter schools association or peers at other charter schools. A school’s letter to auditors should include the school’s legal name, address, and contact person; years of operation of the school; history of prior audits; status of 501c (3) application; fiscal year to be reviewed; enrollment and ADA data for fiscal year to be reviewed; if the school is site-based or independent study; if federal expenditures will exceed $750K; if the school also requests tax filing services. Remember that you should only reach out to auditors listed on your authorizer’s approved vendor list. You might want to ask peers at other charter schools for auditor recommendations, as this can be helpful advice.
Once you have proposals in hand, it’s time to bring them to the board for review and voting action. There are a few key qualities that are important for board members to look for in an audit firm. Preferably, the auditing firm will have experience working with charter schools and understand how they operate; if your school is in its first year of operations, you’ll want to work with a firm that has experience working with first-year charters. An ideal firm will also be responsive to questions and proposal requests, as this is an indication that there will be good communication during the auditing process when pressing questions arise and the school requests feedback and support. It’s also important to select a firm that seems to have a reasonable, fair mentality.
Many districts and county offices of education require some sort of notification of the selected audit firm, along with cost information and certification that the firm is authorized to conduct school audits, and some may require notification prior to April 1, so be sure to check with your authorizer. And be on the lookout for our upcoming blog post about the second phase of the audit cycle, Auditor Engagement!