District Leader Interview Regarding Financial Audits

1. How is the external auditor selected?

In my conversations with Dr. Ryan, GCISD Superintendent, and Ms. Elaine Cogburn, GCISD Chief Financial Officer, both indicate that this is an important decision.  Dr. Ryan stated selecting the district auditor is very similar to selecting a personal financial advisor.  First of all, select an auditor who is familiar with school processes and finance.  By talking with other superintendents, there are auditors with whom districts are familiar and use regularly.  Secondly, a superintendent would want to review their qualifications. Based on the abilities and reputations of the auditor, the superintendent will make recommendations to the board.  Lastly, Dr. Ryan suggested that the district change auditors every few years.  This way, the board and superintendent are getting a fresh look at their procedures to make sure the audit is valid and helpful.

2. How does the auditor conduct the audit?

Ms. Cogburn provided that the process is very tedious.  The auditor spends approximately two weeks on site to look at the various source documents.  They will pull samples of items to test to make sure processes and reports are accurate.  The auditor will select major programs.  They will look at trial balances, compare to previous years and look at variances from previous year balances.  If there is a large variance from previous years, the auditor will pull those reports and do an itemized audit of each piece.  This is the tedious portion.  Ms. Cogburn stated that the point of this is that a district does not want large variances that cannot be explained.  The trial balances pulled include assets, revenue and expenses accounts.  The audit includes a C5 exhibit that provides budget vs. actual to account for any unplanned events such as an expense for a piece of equipment or revenue from a donation or unplanned source. 

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

The audit provides information that the district practices sound financial processes. It indicates any material weaknesses and indicates recommendations about separation of duties, control over the finances, policies and procedures recommended to prevent misuse of funds and the financial strength of the district.  Dr. Ryan recommended that a CAFR( Comprehensive Annual Financial Report) is a helpful piece of information that he relies upon as a superintendent, but Ms. Cogburn stated that that report provides much more than financial basics and is extra work for the financial department that an auditor wouldn’t necessarily need such as AEIS information, etc. 

4. How are the results communicated?

The district communicates the results in a public meeting with the board when the audit results are completed.  They must publish a C3 in the paper.  The district also submits the audit to TEA in three different methods, written, electronically, and by mail.  It is also submitted to the department of education, posted on the district website, and provided to any external group  such as grant suppliers, agencies, etc. would who also need a copy. 

In summary, the purpose of the audit is to maintain as much transparency as possible with the taxpayers.  The communication with taxpayers, TEA, the board and other agencies who support the district is imperative in assuring them that the district is sound, following correct procedures and good stewards of the taxpayer’s financial resources.  In addition, it is in the best interest of the district to make sure the procedures are followed in order to avoid a lengthy, tedious, and, possibly costly, audit of certain funds.