News & Insights
Does Your Charter School Require a Single Audit?
March 23rd, 2021
Audit & Assurance
Many Schools That Haven’t Needed A Single Audit Before Will Need One In 2021 – Is Your School One Of Them?
Federal funding provided to charter schools during the 2021 fiscal year, has delivered much-needed financial support during the coronavirus pandemic. While these funds were essential in assisting schools across the country adjust to remote learning and create safe in-person experiences, they are accompanied by critical, often misinterpreted, compliance requirements. For organizations that haven’t received significant federal support in the past, including charter schools, this could come as a surprise.
If your school received more than $750,000 of total federal funding for the 2021 school year, including money granted through the Coronavirus Relief Funds and Elementary and Secondary School Emergency Relief, you must perform a single audit.
What’s a single audit?
Single audits are required when a non-federal entity (such as a charter school) is granted federal awards that exceed $750,000 in expenditures in one fiscal year.
What’s the goal of a single audit?
The audit intends to ensure the recipient of funding has followed federal program compliance requirements, as well as, to ensure they have proper internal controls in place to ensure compliance. If the audit exposes violations of the rules or serious program abuses, the school may be subject to corrective action and have to repay the funds.
Who can perform a single audit?
Single audits must be performed by an “independent auditor,” which must be a Certified Public Accountant (CPA). Schools requiring an audit should partner with a CPA firm with proven competency, capabilities, and staff needed to perform the audit. Experience is critical to the audit being executed effectively. Single audits are subject to intense scrutiny, and if errors are found, schools will be on the hook for them.
What can a school expect from the audit process?
The auditor will begin by performing a risk assessment to determine which programs will be subject to audit. After clarifying what needs to be audited, they will perform testing on the compliance requirements and the controls in place over those compliance requirements. Those schools that have not undergone a single audit before will be considered to be “high risk,” which means the auditor will need to select programs for testing that total at least 40% of the total federal awards expended.
This includes a detailed review of a school’s financial statements and records, expenditures, and internal controls.
What type of information is commonly requested from schools during an audit?
A single audit generally results in additional testing being performed. This usually means that the school will need to provide the auditor other items to complete the audit. Commonly requested items include:
- Documentation of controls in place over compliance
- Written policies and procedures in place over federal awards
- Sample of program transactions to test for compliance requirements
- Schedule of Expenditures of Federal Awards (SEFA)
Individual items requested vary based on testing requirements for the federal program.
To gather a better understanding of what is likely to be tested for the federal programs you participate in, we recommend reviewing the requirements provided in the 2020 Compliance Supplement. Search by your program name to learn more.
Does your school need a single audit? We can help!
Single audits can be stressful, especially for schools that haven’t experienced one in the past. Maner Costerisan is a proven partner for more than 100 school districts across Michigan. With more than a decade of on-time education audit completions, our experts can simplify the process and ensure your school receives a quality audit.