Last modified: October 4, 2024

Policy No. 6060: Audit

Download Policy No. 6060: Audit

The scope of auditing encompasses the examination and evaluation of the adequacy and effectiveness of the organization’s system of internal control and the quality of performance in carrying out assigned responsibilities.

This policy provides guidance on the selection and engagement of an independent accounting firm to provide opinions and/or reports on the District’s financial statements, internal control over financial reporting and compliance with federal and State laws, regulations, contracts and grants.

The policy also provides guidance on internal audit needs and internal reviews.

Audit Committee

The Board of Education shall establish a district audit committee as a standing committee of the board and shall appoint the members of the committee and replace such members from time to time. The committee shall consist of three members of the Board of Education and two community members having appropriate character and qualifications but who are not administrators or other employees of the district. The district website shall post the names and contact information of the Board and community members serving on the audit committee and the annual audit.

Community members will act as a member of the audit committee for the period of 2 (two) years. New committee members will be chosen by board members sitting on the audit committee or the Business Administrator or Superintendent.

Audit committee members will be provided with training on the requirements of Internal Auditors as outlined in Utah Code Title 53G, Chapter 7, Part 4 and Utah Admin Rules R277-113-4.

The audit committee shall have the following responsibilities:

Ensure the District obtains all audits, agreed-upon procedures, engagements and financial reports required by Utah Code
Ensure that corrective action on findings, concerns, issues and exceptions reported by independent external auditors, internal auditors, or other regulatory bodies are resolved in a timely manner by District administration
Present, as appropriate, information and reports from the audit committee’s meetings to the Board of Education
Receive, as appropriate, reports of reviews, monitoring, or financial investigations conducted by District administration and ensure appropriate corrective action is taken in a timely manner
With regard to engagements completed by an independent external auditor, the district audit committee shall
- Manage the audit procurement and quality process in compliance with state procurement code
- Ensure that the independent external auditor has access to directly communicate with the audit committee
- Review disagreements between independent external auditors and District administration
- Consider District responses to audits or agreed-upon procedures
- Determine the scope and objectives of other non-audit services, as necessary
Establish an internal audit program that provides internal audit services for the programs administered by the district
Advise the Board of Education in the appointment of an audit director or in contracting for internal audit services
Conduct or advise the Board of Education in an annual evaluation of the audit director or contractors providing internal audit services
Prioritize the internal audit plan based on risk, receive regular updates on the internal audit plan and internal audit project progress, receive final internal audit reports from internal auditors or contractors providing internal audit services, and provide an independent forum for internal auditors, internal audit contractors, and other regulatory bodies to report findings of fraud, waste, abuse, non-compliance, or control weaknesses, particularly if District administration is involved
ensure that copies of all reports of audit findings issued by the internal auditors are available upon request to the audit director of the State Board of Education, the Office of the State Auditor, or the Office of Legislative Auditor General
ensure that significant audit matters that cannot be appropriately addressed by the internal auditors are referred to the audit director of the State Board of Education, the Office of the State Auditor, or the Office of Legislative Auditor General

Independent Financial Auditor

The purpose of an independent financial audit is to evaluate the district’s system of internal controls and to attest that no material misrepresentation exists in the annual financial report.

Selection Process

Independent financial auditors will be selected to perform annual audits through a competitive process at least every five years. Contracts will be awarded for a 3 year period with a 2 year option to extend.

The selection committee shall be comprised of the Audit Committee, Business Administrator, and Director of Accounting.

External Audit Scope

External auditors will conduct audits in conformance with Generally Accepted Accounting Principles (GAAP), the Utah State Compliance Guide (State Auditor’s Office), The Federal Single Audit (OMB Circular A133), and other Federal, state and local audit requirements.

External auditors will review the Comprehensive Annual Financial Report (CAFR) as it pertains to financial audit standards.

External auditors are responsible for the issuance of any and all required opinions, internal control and compliance reports and management letters in connection with the audit of the financial statements. District assistance will be provided to external auditors in order to produce timely and accurate financial statements and related audit opinions and reports

Internal Audit

The purpose of an internal audit is evaluate and improve the effectiveness of governance, risk management and control processes. The internal audit function shall adhere to Utah State code.

Unless district resources and internal audit needs warrant an internal audit staff member, the district’s internal audit function shall be outsourced to qualified accounting professionals. Selection of the firm shall be by the audit committee.

The internal auditor reports to the Audit Committee and ultimately to the Board of Education. The Internal Auditor’s work shall be determined primarily by a risk assessment developed by the Internal Auditor and approved by the Audit Committee at least annually.

The Internal Auditor shall:

Immediately notify the Audit Committee and the Board of any irregularity or serious deficiency discovered in the audit process or of any impediment or conflict to accomplishing an audit as directed by the Board.
submit a written report to the Audit Committee and the Board of each authorized audit within a reasonable time after completion of the audit
ensure that audits are conducted in accordance with professional auditing standards such as those published by the Institute of Internal Auditors, Inc., the American Institute of Certified Public Accountants, and, when required by other law, regulation, agreement, contract, or policy, in accordance with Government Auditing Standards, issued by the Comptroller General of the United States
report significant audit matters that cannot be appropriately addressed by the Audit Committee and the Board to either the Office of Legislative Auditor General or the Office of the State Auditor
report quarterly to the full Board those issues which have the potential of opening up the Board, Superintendent, or USOE to liability or litigation
conduct at least annually a risk assessment of the entire public education system and report the findings to the Audit Committee
regularly attend Board meetings or review Board meeting minutes

Internal Reviews

The purpose of internal reviews is to determine whether the ongoing processes for controlling fiscal and administrative operations throughout the District are adequately designed and functioning in an effective manner. Reviews include:

The reliability and integrity of financial information
Compliance with policies, procedures, plans, laws, and regulations
Safeguarding of assets

District resources do not allow for an internal audit department/staff members. As such, in addition to an outsourced internal audit outlined above, the Business Department will do limited and random reviews of financial data and controls in the course of its day to day activities to provide a level of comfort that the actions of employees comply with the District’s financial policies, and procedures and applicable laws and regulations.

When routine financial reviews or annual financial audit findings warrant, the business office will contract for additional audit reviews or an expanded scope of the financial audit. The scope of the audit review will be determined based upon circumstances and possible concerns raised.

Results of additional audit reviews or an expanded audit scope will be communicated to the superintendent and other District departments as findings warrant.

References/Regulations

State Board Rule R277-425
State Board Rule R277-113
State Board Rule R277-116
State of Utah Legal compliance Guide (State Auditor’s Office)
Governmental Accounting Standards Board (GASB)
OMB Circular A-133 (single audit)
Utah State Code 51-2a, 53A-3
Utah State Code 53G-7-401
Utah State Code 53G-7-402

Approved by the Board of Education

September 10 2024