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Keeping you ahead of the curve with timely news & updates.

Management Letters are Your Friend

abc-chalkboard.jpgCharter schools are part of a broad movement in public education toward results based accountability, and began operating in New York through the New York Charter School Act of 1998. Although charter schools have been in operation across the U.S. for nearly 15 years, much of the current knowledge base is about the financing of charter schools (including state charter school finance systems, funding streams, and facilities funding) rather than the financial management within them.

Auditor comments within a management letter help address deficiencies with financial reporting so that board members and management can make proper business decisions - with the ultimate goal being to strengthen the collection of data for financial reporting.

Children’s education and the strengthening of the educational system is important, so it should be a primary focus to be able to provide the best tools and resources for students to succeed. With the understanding that charter school boards vary in size and qualifications, the average board comprises ten people and at least one person with a background in financial management. Charter boards have primary responsibility over budgeting and financial reporting, but are less likely to have final control over human resources, staffing ratios, and purchasing.

These challenges can make it difficult to obtain the right staffing to reduce severe deficiencies. Incorrect reporting of financial data can impede the progress of the future success of the educational system. With the use of state aid, it’s doubly important that schools are being fiscally responsible. The benefits of an auditing consultant can help reduce the burden of meeting the fiscal recommendations of management letters.

Our consulting firm focuses primarily on:

  • Quarterly reviews of the financial data,
  • Being an intermediate level of oversight between the auditor and the board,
  • Analyzing contract costs,
  • Performing assessment reviews and recommendations of internal operations and,
  • Assisting with financial projections.

We understand the challenges that charter schools face with staffing limitations and can help provide remediation. If you would like help with your next audit or management letter consulting please contact us.

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The Charter School Act Impacts Audit Requirements

By: Chris Piedici

New York State schools recently received $697 million under the “Race to the Top” funding through the Federal Government; this will include monies to NYS charter schools. Along with this is a $113 million grant to NYS under the Federal Charter School Program (CSP). It is the responsibility of the New York State Education Department (NYSED) to monitor the use of public funds, including CSP grants; necessitating a very high level of audit quality.

As a pass through entity, NYSED is responsible for monitoring the proper use of funds and compliance with CSP grant requirements by each school awarded funds. NYSED has decided that the most efficient and effective way of monitoring grant compliance is to allow each charter school an independent auditor, who is already reviewing records of the school, to perform additional procedures as part of the audit and then issue a separate report.

Charter School Audit Requirements

In accordance with the charter school agreement, the school shall retain an independent Certified Public Accountant (CPA), licensed in NYS, to perform the audit of the charter schools annual financial statements. The report shall include:

·         Agreed upon Procedures Report on Initial Statement of Controls

·        Opinion on Audited Financial Statements

·        Report on internal controls over Financial Reporting and on Compliance and other matters based on Audit of Financial Statements performed in accordance with Government Auditing Standards

·        Agreed upon Procedures Report on Charter School Program (CSP) grant

·        Report on compliance for each major federal program, internal control over compliance; and on the schedule of expenditures of Federal Awards required by OMB Circular A-133.

Deadlines for the Agreed upon Procedures report is due no later than 45 days after audit engagement has begun. As well, all audited financial statements must be submitted to NYSED by November 1st of each fiscal year after the conclusion of the charter school’s first year of providing instruction to the students.

A full report and explanation on the charter school guide can be found on the New York State Education Department website.

Contact Us

For more information on auditing procedures or to speak to a CPA regarding your Charter School audit needs, please contact our Rochester office at 585-271-2300 or click here to contact us.

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