Massachusetts DESE Issues New Guidance on Approval of Annual Financial Statement Audit
AAFCPAs would like to make our Massachusetts education clients aware that in July 2020, the Massachusetts Department of Elementary and Secondary Education (DESE) issued the final version of their audit guide to be used for fiscal year 2020 financial statement audits. The only change from the prior version related to Section 201: Administering the Audit, which will only affect schools that have audit findings.
In the past, the School’s Board of Trustees was permitted to delegate the responsibility of approving the audit to the audit/finance committee. The updated audit guide now includes a provision that requires the full board to approve audits with certain deficiencies as follows:
If the audited financial statements contain findings consisting of Material Weakness, Significant Deficiency, Non-compliance, and/or Questioned Costs, the Audit/Finance Committee has two options to obtain the full Board of Trustees’ approval. The Audit/Finance Committee must either present the audit to the full Board of Trustees for a vote to accept or the full Board of Trustees must vote to approve the Corrective Action Plan that results from the Department’s review of submitted audited financial statements.
“While we strongly believe the audit presentation is most appropriate at a finance or audit committee level, having the full board aware of any potential issues is important,” said John Buckley, the Partner in charge of AAFCPAs’ Education Service Division.
“The vast majority of the schools we work with have us present the audit to the audit or finance committee, and afterward, the board treasurer provides a synopses to the full board. This allows client finance/audit committees to spend the appropriate amount of time digging in to the financial details, which may not be a valuable or productive use of time for the full Board,” added Buckley.
Under the new policy, affected schools may continue to have the auditors present at the committee level while having the board approve any corrective action plan.
AAFCPAs reminds clients that audited financial statements are due to DESE by November 1st and must be approved prior.
If you have questions, please contact John Buckley, CPA, CGMA at email@example.com, 774.512.4039 or your AAFCPAs Partner.