In conclusion, school districts, like different governmental entities, must yearly compile financial information and report on their monetary place. Accounting and reporting requirements for this data are set forth by a number of oversight businesses, including GASB, FASB, and AICPA. A main change in reporting requirements for governments was recently established by GASB Statement 34. This accounting commonplace requires governmental agencies, including faculty districts, to extend their financial reporting to incorporate governmentwide monetary statements as well as the traditional fund reporting.
Although this new reporting model does not change the essential inner control expectations for governments, GASB Statement 34 presents new financial reporting challenges for college districts. If accounting information is routinely used in making operating choices, management is more likely to set up efficient controls and maintain lower-stage managers and workers accountable for efficiency. In addition, if management routinely makes use of accounting info in measuring progress and working results, significant variances between planned and actual outcomes are prone to be investigated. This evaluation might detect the causes of the variances and affect the steps necessary to correct procedures that failed to forestall misstatements.
Effective internal management over monetary reporting often includes a combination of preventive and detective controls. .A3 A deficiency in internal control over monetary reporting exists when the design or operation of a control does not enable management or employees, in the regular course of performing their assigned capabilities, to forestall or detect misstatements on a timely foundation. .82 The auditor isn’t required to carry out procedures that are sufficient to determine all management deficiencies; quite, the auditor communicates deficiencies in inside management over monetary reporting of which he or she is conscious. The auditor also should contemplate whether there are any deficiencies, or combinations of deficiencies, which have been identified through the audit that are vital deficiencies and must communicate such deficiencies, in writing, to the audit committee. This communication must be made in a well timed method and previous to the issuance of the auditor’s report on inner control over monetary reporting. .79 If the auditor concludes that the oversight of the corporate’s external monetary reporting and inner management over monetary reporting by the corporate’s audit committee is ineffective, the auditor must communicate that conclusion in writing to the board of administrators.
.C12 Management’s Annual Report on Internal Control Over Financial Reporting Containing Additional Information. Management’s annual report on internal control over financial reporting could contain data along with the elements described in paragraph .72 which are subject to the auditor’s analysis. The outcomes of these tests of controls and the service auditor’s opinion on the working effectiveness of the controls. The extent of such misstatements might alter the auditor’s judgment in regards to the effectiveness of controls. .A11 A significant deficiency is a deficiency, or a combination of deficiencies, in inner control over monetary reporting that is less extreme than a fabric weak spot, yet necessary sufficient to benefit consideration by those answerable for oversight of the company’s monetary reporting. .A8 Controls over financial reporting may be preventive controls or detective controls.
Ineffective oversight of the corporate’s external monetary reporting and inner management over financial reporting by the company’s audit committee. Testing controls over a larger time period provides more proof of the effectiveness of controls than testing over a shorter period of time.