5 Tips for Preparing for Your 2020-2021 Audit

CPAs & Advisors

Jessica Rolfe
Jessica Rolfe CPA Principal CPAs & Advisors

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It’s been an interesting year, to say the least. School districts have been affected dramatically by the pandemic regarding virtual learning, safety protocols and funding. The 2020/2021 audit season is approaching quickly, and preparing for an audit year that had so many changes and uncertainties can be nerve-wracking. Below are some tips to help with your 2020/2021 audit preparation:

1. Identify your federal funds. New funding was pouring in during the year. Identifying for your auditor which revenues and expenses were federal will be essential. Preparing an accurate schedule of expenditures of federal awards (SEFA) will be more important than ever before. Some of these new funding sources may need to be tested for the single audit, so providing correct information up-front will result in the proper programs being tested. Also, if you are providing your auditor with a preliminary SEFA before year-end, correctly estimating expenditures through the end of the year will be very important as well.

2. Document changes in key controls. Many districts had periods during the year where administrative staff were working remotely. Perhaps procedures for your internal controls had to change as a result. Were invoices being approved electronically rather than via signature? Were individuals being paid even though they weren’t working their full FTEs? Documenting changes to your processes and controls in your main transaction cycles because of COVID-19 will be imperative for auditors to evaluate and assess your internal control structure during the audit.

3. Avoid double-dipping. With COVID-19 funding added on top of usual funding sources, a significant emphasis will be placed on verifying that expenditures were not “double-dipped” between grants. Some of the COVID-19 grants allowed for expenditures to be charged back from the 2019/2020 year. Auditors may be looking to verify that those expenditures weren’t first charged to one federal grant during 2019/2020 and then charged to a COVID-19 grant in 2020/2021. Make sure expenditures journaled to COVID-19 grants were not charged elsewhere and are clearly identified and supported.

4. Analyze Budgets. Budgeting hasn’t been easy. In many cases, school districts have had to create various scenarios for the budgets. Changing factors regarding virtual learning, funding cuts, new funding, allowable expenditures, and allowable periods for expenditures have made budgeting a constant concern. Be sure to evaluate the budget to actual results closely towards year-end. Districts will need to make the necessary amendments to keep from incurring expenditures in excess of budgets.

5. Prepare for GASB 84. School districts had the option in 2019/2020 to implement or delay the adoption of GASB 84. If you are one of those districts that delayed, implementation will need to occur in 2020/2021. Districts will be required to evaluate their fiduciary funds and determine whether student activity funds are now special revenue funds based on whether the district has administrative or direct involvement. Those deemed special revenue funds will be moved, and a new fund (Fund 29) must be set up on the district’s books. Don’t forget that this new fund also requires a budget.

Properly preparing for these items will result in a more successful audit in the upcoming year. Yeo & Yeo’s Education Services Group is here to help with questions or concerns you have about the audit or other matters.

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