The Auditor and The Audit

Communication is Key

Strong lines of communication between a school board and the district auditor can be the cornerstone to a strong foundation for ensuring taxpayers that their funds are being well cared for.

Colorado statutes require that the governing body of every school district in the state shall provide an annual audit of the financial affairs and transactions of all funds and activities of the school district. The audit must be completed not later than five months after the close of the fiscal year and, in fact, school boards may at their own discretion require more frequent intervals for audits, whether they are comprehensive in nature or on specific programs.

The audit serves several important purposes. It attests to the accuracy of the financial reporting and fiscal status of a district. It also provides an opportunity for a board and staff to find new and improved ways of doing business.

After reviewing a district’s records and verifying the accuracy of the financial numbers for the prior year’s activity, the work of a board and its auditor is just beginning. The next steps should include:

A presentation of the results of the audit to the board in public session. This can involve a frank conversation with the auditor either at a public board meeting or at a public work session. Discussion topics would include areas that are being managed well, as well as concerns or areas where the district might benefit from additional improvements. To generate a good dialogue with the auditor means that each board member should review the management letter to the board of education and the audit document itself. Being prepared for this important discussion means being prepared to ask good questions.
A discussion with the staff on what the next steps will be to address any issues presented by the auditor
Formal acceptance of the annual fiscal year audit during a regular board meeting
The board should plan on asking good questions during the auditor’s presentation to the board. Questions from the board to its auditor need not be technical, and, in fact, often serve the public, fellow board members and the staff better by being of a more practical nature.

Questions posed to the auditor could include:

How would you describe the overall financial condition of the district?
How strong are the overall fiscal management and internal controls within the district?
Were there any material issues that came to the forefront and need to be addressed?
How would you describe the staff ’s management of financial records and work in preparing the annual financial statements for the auditor’s review?
Based on previous audits of the district, what improvements have you observed in either the internal controls of the district’s financial management system or the district’s financial reporting?
What opportunities does the district have to improve its financial record keeping?

The strength of a school district will be reinforced by both supporting the work of the auditor and helping to bring important questions and answers on how well the district is operating. By doing so, a board has the opportunity to build trust and reinforce the public’s faith in the board’s stewardship of taxpayer funds.

Source: Scott Murphy, former superintendent, Littleton Public Schools