Conventional and intermediate school districts and charter schools must submit an independent auditor’s report to the state each year detailing their financial positions.[ccxxviii] According to the Michigan Department of Education’s “Michigan Public School Auditing Manual, 2005/2006,” this audit should not only give an independent appraisal of the district’s financial resources, but also indicate whether the district or charter school follows appropriate internal procedures for handling school district finances (“internal control compliance”). Further, the manual states that these audits must be “performed in accordance with generally accepted government auditing standards (GAGAS).”
The audits typically include the following:
a letter of introduction;
a “management discussion” that may explain accounting methods employed to audit the district’s records;
a series of financial statements that highlight a district’s fiscal position;
important notes of explanation; and
supplemental fund data comparing previously budgeted amounts for, say, capital outlay with what was actually spent from that fund in a particular fiscal year.[ccxxix]
[ccxxviii] These audits should not be confused with the widely known Comprehensive Annual Financial Reports produced by municipalities and other government organizations. School audits may contain the same information as CAFRs, but CAFRs require far more historical data than those submitted by school districts to the state.
[ccxxix] For further reading on these subjects, see the Michigan Public School Auditing Manual, www.mi.gov/mde/0,1607,7-140-6530_9091-67431--,00.html. Recent audits of school districts can also be obtained from the districts directly.