A Guide to Help K-12 School Districts Prepare for Audit Season

Financial statement audit season can feel overwhelming for K-12 school districts, but it doesn’t have to be. With a little preparation and clear communication, school districts can  prepare themselves to have a successful and smooth audit. Below are some practical steps you can take in the months leading up to your audit to help ensure a positive experience.

Get Organized

Good organization is the foundation of a smooth audit. Make sure that important documentation is easy to access and clearly labeled, including:

• Bank statements
• Vendor invoices
• Significant agreements and contracts

When auditors can quickly locate what is needed, the process moves more quickly and requires fewer follow-up questions.

Get the Books Up to Date

Before auditors arrive, your accounting records should be current. You will need to do the following:

• Month-end closes through the audit period
• Reconcile all bank accounts
• Post any known adjustments

Ideally, your books should be reconciled through the current date. Up-to-date records reduce surprises.

Review Your Financial Results

Don’t wait for the auditor to tell you that something looks unusual.

Run:

• A preliminary balance sheet, as of the audit date
• A year-to-date budget to actual income statement 

Then ask:

• Do the numbers make sense?
• Are there unexpected variances?
• Are any balances unusually high or low? 

If something stands out, investigate it ahead of time. Unusual results often point to   adjusting journal entries or posting errors that can be corrected before the audit.

Understand Your Compliance Obligations

School districts have unique compliance requirements that often go beyond the basic financial statement audit.

Be aware of:

• Significant federally sourced funding that may trigger a Single Audit 
• Illinois thresholds for which K-12 school districts need to submit financial statements or other reporting for GATA compliance purposes as well
• The Illinois State Board of Education’s (ISBE) final regulatory filing deadline, December 15

If your district received significant federal funding during the year, you may be subject to additional compliance testing. Confirm your requirements early so you’re not caught off guard.

Communicate Clearly with Your Audit Firm

Strong communication can prevent most audit frustrations.

Schedule a pre-planning meeting to clarify expectations in the following areas:

Logistics

• Will the audit be performed on-site, remotely, or a mix of the two? 
• What dates does the audit firm have set aside for your audit? 
• Do these dates conflict with high-impact times for your team, such as the first week of school? 

If possible, schedule audit work so that your team is not stretched too thin with everything else going on.

Staffing

• Who from your organization will serve as the point person? 
• Who from the audit firm will take lead? 
• What other individuals on both sides will be involved?

Clear roles reduce confusion and duplicate requests.

Engagement Letter

• When will the engagement letter be issued? 
• What are the expected fees? 
• Will there be any new audit standards this year that will result in additional fees? 

Audit work should not begin until you have signed an engagement letter and you understand the letter.

PBC (Prepared by Client List)

• When will the audit firm release the PBC list to your organization? 
• When does the audit firm expect your organization to fill these requests?

Review the list carefully and begin gathering items as early as possible.

Discussion of Significant Matters

If any significant, unusual transactions have occurred during the year, or your organization is unsure about your books/records and the treatment of certain areas, ask your auditors for advice on these at this time. Early conversations help to prevent complications later.

Deliverables and Deadlines

• When will draft reports be provided? 
• When are filings due to ISBE? 
• Request an exit conference when the auditors complete their fieldwork

An exit conference helps confirm the next steps and ensures everyone is aligned before the audit is completed.

Final Thoughts

An audit shouldn’t feel like a surprise inspection, instead it should be a well-managed project. When a school district stays organized, keeps financial records current, understands the compliance requirements and communicates clearly with auditors, audit season becomes more manageable. If you have any questions during your district’s audit, the trusted advisors at CK can help. You can call us at 630.953.4900 or contact us through our website.