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Find out what it means to be a school business official and get your insider pass on all things school business. Hello everyone and welcome back to another episode of School Business Insider. Today we're diving into a crucial aspect of school business management, the financial audit process and the vital
relationship between school business officials and their auditors. Joining us are two exceptional guests, Regina Samson, business manager at Corbett School District in Oregon, and Gene Larson, director of government resource management and senior audit manager at Amcwa Valley Financial. Together they bring a wealth of experience and knowledge about how to navigate the complexities of school district financial audits while fostering a strong collaborative relationship.
In this episode, we'll explore the technical steps involved in a financial audit, discuss best practices for preparation, and highlight the importance of communication and trust between school business officials and auditors. Regina and Gene will share their insights on how to overcome common challenges, ensure a smooth audit process, and maintain financial accountability in school districts. Regina and Gene welcome to the podcast and so happy to have you both. Thank you.
So before we get into really what a successful relationship is between business officials and auditors, I would love for both of you to kind of just give your background and really how you got here today. So maybe Regina we can start with you. Sure. So again, Regina Samson, I'm the business manager for Corbett School District in Oregon. I started my whole career off just out of college as an auditor. So doing audits for governmental entities, which included community colleges,
so that kind of gave me the introduction into the education role. In my current role, of course, audit, budget, and all things finance for the school district. Great. So you have a real true appreciation for the audit process being an audit yourself, in a previous life. I really do. Yes. Okay. So Gene, why don't you give the audience a little bit of your background? Well, I started off actually in healthcare and I was an internal auditor for my
first job in healthcare for a corporate, healthcare organization. I had a lot of hospitals. And then eventually made my way as a financial director for hospitals. And was a high level director for four different hospitals over the course of that part. In 2019, I joined the Covali Financial. And while I had spent many, many years on the other side of audits, while I have all of those organizations, then I became involved in the municipal audit
process. And that's a little bit different, but yet a lot the same. And so what I do here at UVF is participate in the audit, sub schools and cities, counties, etc. that are directed by the Oregon Budget Law, municipal division. And there's, and so work with those. And then I also participate with helping some clients that need additional things, which was under the government resource management piece of that, which is more of a consulting wing of our organization.
Great. Wonderful. Well, again, welcome both. I'm so happy to have you on the podcast today. So kicking off, why is it important in your opinion for school business officials and auditors to really have a strong working relationship now, depending on how often you're auditing and going through these processes, it may be once a year where you're actually working together, but talk to me about why it's so important for that relationship to be so collaborative and so strong.
You know, May Regini can kick us off. So definitely, you know, having a strong relationship with your auditor supports your bond ratings. If you're able to show that you're following processes in procedures, which is what your audit is really confirming, then your bond ratings will reflect that. And it also ensures that we are following our policies and procedures and to ensure the community,
as well as the board, that that's the direction that we're going. I think it's it also affects our daily work because if if something, you know, if a process, if I'm not sure about a process, that can always, you know, contact on Paul Valley and and get their input on what that process looks like across the state or across the nation because they they they're out there. Then I can get those best practices and work with that to implement good processes within the
district. It sounds to like being able to reach out to your auditor throughout the year is really a proactive step. So if you're finding out those best practices ahead of time, likely nothing's going to show up on your audit because you're already doing it correctly, right? So that's great. And then and then Jean from your standpoint, I mean, working with so many different municipalities and school districts, why are those relationships with the school business officials so vital and so
important? Well, from our side, it basically improves the process and the outcomes. And and as Regina said, sometimes you reach out during the year. I was I've been contacted several times even this week about, you know, hey, how do we handle this kind of thing that's coming up at our organization? What should we do and we can tell them, well, you know, you really need to keep the board involved or whatever. You need to have the boards approval or you need to do something else with that.
And and that way it gives a comfort to the organization that they're pointing the right direction. But it saves time effort and everything from that perspective. But I think having a good relationship with your auditee is incredibly important because, you know, it helps. It helps to have the transparency and accountability process go through much easier. If if you have someone who's reluctant or feels uncomfortable with, you know,
providing the information, it's a stumbling block to the process. And with it, being able to, you know, have respect and have open communication between the two of you just really helps that flow. And with that, if we're seeing something that, you know, one of the big things with auditing is understanding the entity. And in doing so, we have to, you know, we have to see what's going on there. We see something we ask questions about it. It's really best not to
just jump to assumptions. It's really good to be able to discuss it and maybe even help direct it in a new direction if necessary so that the organization is able to meet all the regulations and requirements they have. And I think I could just follow up on that. The, you know, having communication with your auditor, whether it's, you know, they ask a lot of questions and ask for a lot of information. And just being able to just provide that information,
whether it's good or bad. And then follow up with if it's, you know, not really what you're wanting to present to somebody. You're not wanting really auditors to see it. Then it's, okay, this is what we've done. Here's why we did it or here's the process. And this is the direction that we're going to improve this. Makes it better. Yes, we're not all perfect. You have things you, you mess up on or the processes aren't perfect. And you just have to work through.
Sometimes it takes a while to get your processes lined out to where it's better for the, the district. But just communicating that to your auditor, let's them know that you are, you understand and you're moving in the right direction. Right. You make a good point. I mean, I remember when I first started as a school business official and I went through my first financial audit, I was really intimidated because, hey, I had not been through one and be. It was
a big deal, right? And I wanted to be perfect, but to your point, none of us are perfect. So, I guess my question is for Jean. I mean, when you're working with schools and school business officials, I'm assuming that you're keeping that in the back of your mind, right? You want to be a resource for school business officials. Can you talk to me a little bit about dealing with those imperfections and being a resource for school districts? Sure. This whole process is always
educational for both sides. But, you know, we, there's a lot of different angles that auditors can come from. And I know our organization in particular really wants to be able to assist and help in the ways that they can, the districts that we work with. I guess I would probably tell a little story about one that happened in this last audit and that we had a school that had a quite new business director. And through the course of it, we found out they had a quite new
HR director as well. And both of those positions have been held by long-term people before them. And all the procedures and stuff had been written by the people before them. In the course of the audit, we found one item where there was a problem with their data. They're, the data that they were keeping for the organizations. There was something that was important and that wasn't being done. And they defended. They defended the long-term rule. And then we ended up having to, we asked
them for a meeting. We sat down. We explained and said, no, here's what the regulations are. And then you have kind of the option. You know, are you willing to rewrite and take it to your board and change going forward? If so, then, you know, we didn't say this out loud. But if so, then we understand that they are completely working to improve their processes, to move forward. It's not those two people who were at fault. It was the people prior to them.
And so they did that. In which case, we did not put a finding out there for that. Because which goes to Regina's is like, improved your bond rating and so on. But we were able to work together with them. They both, they will never forget this. They are all very educated going forward on it. So all of us, you know, we all learned things out of that process. Because it was an item that, you know, an organization is supposed to keep and they did it. And it's like, what do you mean?
And how can that be? And they were both very, very new. So they had only been instructed by the people who instructed them. And so overall, they're educated. We learned to always watch for that even more than we ever did. And they did not get, they did not get, you know, a finding on their audit. Their board was made or their administration was made aware. And they were educated. So the growth happened all the way across the organization. That's great. And it sounds like, you know, it's
an opportunity to educate as you said. But it's also not a Gatricame. You're here to help out school districts, right? That's right. And, you know, the thing is, is that it's hard to be a school district director. There's a lot of work involved. And there's a lot, it's hard to be a
school and follow all the rules. And all of that, being able to help them do it better. And as a support to that whole thing, at the same time, we have, you know, many inches of books that is new every year that we need to make sure that we are following. Right. So, but being able to be open and have that communication and talk through and
improve together is incredibly important. So our listenership here on school business insider varies from those who've been in the seat for multiple, multiple years and those who are just starting out. But I think it'd be worthwhile to kind of talk through the auditing process and what the typical steps are involved in doing so. And we'd love to hear both perspectives, you know, from you Regina is a school business official and Jean from your side kind of coming
into a district. So, you know, Regina may be starting with you. Can you just kind of walk us through those typical steps involved in a financial audit? Sure. So I'll just, I'm actually new to Corbett school district just since July 1st. So first thing I do is I read the board policies related to finance. Going through those gives me one I can get perspective as to what is important
to work, what is in those policies, what direction I need to go with internal processes. And then I can also determine if anything needs to be revised and make those recommendations at that point. From there, you know, I start looking at internal processes. How is everything working? That's not always just a one step process. You can't just sit down with each person and talk
through the processes. Sometimes you have to watch them. Because what people have documented the process to be versus what they're telling you and what they're actually doing really has some variations. Sure. And so you have to have time to review those processes and see how they're actually working. And then one of the things that I have found to be critical in the process is monthly reconciliation. Really, I do a modified year end every month so that at the year end,
all I have to do is one month plus a cruise. It makes this so much easier than having to look back over an entire year to reconcile a liability account that you haven't touched for an entire year. And so doing those monthly reconciliation, you know, of your ballot sheet as well as your major income and expense accounts such as payroll. I find it really simplifies the year end process and makes it a lot more streamlined and you simply, you know what you're doing for the audit
because you do it every month. Right. Well, I'm getting a theme from you Regina. You seem to be very proactive in all of your operations. That's great. I'm really proud to be. And so, Gene, on your end of things, can you walk us through your perspective on a financial out of fruit school district and really what those typical steps are?
Now, well, we start the audit process for each year by reviewing essentially all the changes in the regulations and by changing all of our templates and all of our planning going forward with that to make sure that we are using up to date information and guides. Then we have the communications and we gather information. We'll gather the trial balance. We'll gather, you know, other information. We'll gather information about those procedures that Regina was talking about,
how do they go about doing the process that are there. One of the big pieces is understanding the entity. How does that entity work? What are the risks of that entity? What do they have that are risks to them? What's the risk to the organization? Once we have that, we basically do a testing of information. We'll look at significant audit areas. We'll look at all of those
reconciliation. You'll look for items where you have external documentation to ensure that the information is correct and then we'll evaluate what the testing and that review has brought up. And, you know, start to look if there's anything that did not reconcile out or did not agree and follow those. So then we'll look at the internal control portions of things and make sure that
they have those in place. And then we will... Well, you know, we look at everything from what, you know, what is the position of the directors through the managers and then all of the details. So at the end of that, we end up pulling together a financial statement that will be the actual audit itself and then includes, you know, information about the entity and then also all of the notes and all the required exhibits that have to be part of the audit. But there's that middle part
of the audit can take quite a while. And then also there is, you know, there's other requirements in the case of schools. There's the... They get federal grants, they get state grants. There's an awful lot of data in detail that must be correctly processed and recorded throughout that. And that is an area that I end up spending a lot of time in with organizations that have to have sing a lot of it. And a sing a lot of it is when you have federal awards or federal expenditures
of awards above a certain amount. And then after we're finally done and the organization has reviewed the audit and we have come to a final, then we do all the final paperwork as far as recording for the federal declaring house and Secretary of State and Department of Education. So it's a very involved process, obviously, but the same as new school business official, a couple months out from your end. What kind of information and documents do I need to start
gathering to ensure a smooth, successful audit? I mean, need to be like Regina says, those reconciliation are incredibly important. And then also we will need the information on the grants, only reconciliation, information on your grants, your general ledger, even if we have it on an interim basis. And this is where it makes people nervous sometimes is that we have people in the field today and the people are saying, I'm not completely done. Well, you're completely done with
writing checks. So you could give us a listing of your checks so we can start that testing process. You're completely done with a couple of other areas because you're no longer adding items to that. Even if you're still reconciling things and doing journal entries at the end, there are portions of this. You're done with your payroll. Those kind of things can be tested as first things to make sure that those were handled correctly. So those would be the first
ones that we usually hit because or hit, that's bad word. Those are the first ones that we usually will approach to begin the audit because those are those are transactional. They're not, they don't have any judgment involved. They don't have any variations involved. They are what they are and they are as they happened. And so we'll usually start with those for the major testing portions. So if I'm in the middle of an audit, you said the middle portion is kind of the largest segment of it.
I'm wondering what are those most common areas of focus during a school to financial audit? I mean, maybe Regina, we can start with you in terms of your specific experience. Are you seeing recurring themes in terms of what is being tested? What are those common areas that you see year-end and year-out? So year-end and year-out, of course, cash is always number one because it's the most easily tracked. You can track it through very easily and it's susceptible to risk.
And then of course grants, all of ensuring that your grants are properly recorded and accounted for, that you contract them separately and identify what expenditures are going with which grant as opposed to coming, coming wouldn't things. From there, of course, you're, you know, your 941 reconciliation to your GL to ensure your payroll is all lined up. And I mean, it's really just every single balance sheet account and then your
major revenues and expenditures. So that's really the major focus of all of those. And to kind of circle back a little bit on the grants, Jean was mentioning, I tried to also pull a couple of times each year, the state and federal A133 recording that this is what the state and the feds say that they're giving us. And we actually received that and did it go to the right place. And so in having that reconciliation, you know, I do it a couple times a year to ensure that I'm
correct. And then I do it at year end. And that is part of my supporting documentation for those grants to ensure that they, that my auditors can find where those funds are. So it just makes it a little simplistic for for tracking purposes. Regina, I have to imagine your auditors are very, very smooth with all your proactive data collection and reconciliation. I don't know if you're always smooth because I choose districts that have room for improvement.
Sure. And so then we have to kind of work together to ensure that we are moving in the right direction. Right. Right. Makes sense. And then Jean on your end of things, I mean, what do you see in what are you testing most in in school districts? Is there a common theme? Is it, you know, you said a few times you really need to know the entity of what you're working with? How does that kind of vary in terms of your your testing? It varies actually quite a bit. It can affect how many things
you need to test. And so one of the things in knowing the entity is understanding whether they have the internal controls in place to make sure that nothing is, you know, falling between the cracks. If you find that those internal controls are not in place, you will probably choose to do additional testing from the standard to make sure that you have gathered and have been able to review enough to make a knowledgeable decision on the audit.
But sometimes you find where there can be slip ups at the organization. Sometimes we had more than one organization this past year where they didn't give us all of the information. And they gave us what they had at the beginning and then they continued to do additional work after they gave us the audit. But it was it was more than one organization that did that.
We have found there's a couple two or three a year that, you know, where someone doesn't realize usually, I'm going to give them that leeway, that, you know, once you've got the audit in place, if you're continuing to reconcile and do a bunch of things there, you need to let your auditor know.
Right. Because what happens then is that the audit, everything that they have and the auditor will, look, is the bank, you know, does it agree with the bank, does it agree with your 941s, does it agree with the Oregon, you know, this and the Oregon 133, does it agree with all of the other external documents. And that's fine. But if you continue to stir things inside and move things around, then honestly the audit does not actually represent the organization as it is.
Right. And that's part of this open communication that, you know, should be there. And, you know, and it causes, you know, a slowdown. It causes additional work on both sides whenever these kind of things happen. And so it doesn't, it doesn't just, it doesn't contribute to a real successful audit in the end, in a, in a real positive way, whenever things like that do happen. And I think, honestly, it's usually because you have someone who is not fully knowledgeable or a tape to say that
they're trying to cover something up. But sometimes we have actually had that happen as well. A little bit of jumping back to, you know, how Jean was talking about, they can test certain things, they can test cash and they can test payroll. And that's, that's true. They can, they can do that. And as an organization or as a business manager, if that works for you, that's, that's great. But for me, that doesn't work because I want to make sure that everything is in the best
position it can be in before I release it. And, you know, we have, depending on what type of system you use, your accruals may post cash at June 30, that you need to move out. And if you're releasing information to the auditors and then that transaction posts, there's, you know, there's a discrepancy there.
So I like to ensure that everything is the best it can be. Then I release it. And then, if there's things that come up between that time and the time that we release an audit financial statement, then at any time, I make any type of transaction into the system once it's been released to the auditors, that is a communication. And we agree on what's being done before it, before it happens. That way I can, I actually send them a copy of the journal entry that comes
out of the system so that they can then put that in on their site as well. So it's just really, I mean, once you release that trial balance, everything you do really needs to be communicated with your audit. Right. So just because the year end date hits, doesn't mean everything comes
to a screeching halt. There's always something going on after those dates. So being in constant communication with your auditors crucial, which leads you to my next question, how do you ensure that financial records are accurate and complete once the audit begins and sounds even more importantly throughout the auditing process? And kind of second to that, how or what kind of issues have you found arise during that and how can they be avoided? To check for completeness, we will generally
initially check for external documentation. And we will look for, you know, does your, we'll get confirmations from your debtors, we'll get confirmations from your banks. We will review, we'll review the invoices, we'll review, we'll review the information from the department work and, or department education and the A133. And make sure that all of those things agree to your records. Then during the audit, we will review invoices, we'll review payroll records,
make sure the employees are real. We will ensure, do all this testing to be able to do that. We will test to make sure that the invoices that we're seeing out of your records that you did pay appear to be valid and not manipulated in some way. So that's kind of the way that we would go about making sure that all the organization, all the information is correct. On a regular basis, one of the things is that your
reconciliation, you know, Regina's huge reconciliation. So we're always glad to see her at some of the organizations that we have. So with the reconciliation, one of the things that does happen is that it will come through and people will do a reconciliation and then they'll
go back and do journal entries after that will affect the reconciliation. I can't even describe how many times we have found that, where the reconciliation agrees and everything else, but then if you have the rerun it again, it no longer does because of journal entries that were made to the books after they closed that reconciliation. Another thing is that making sure that the invoices are complete, making sure that you have everything with that is, you know, say it's a capital
project and they're working through all of that. Do you really have all of those and does it agree with the information that we're supposed to be reporting to whatever the administrator of that process is? We run into things with grants a lot where organizations do not do as much
study into what grant the information is for. I've actually had instances where an organization had expenditures asked for those expenditures to be reimbursed by one grant, move the expenditures to another location in the general ledger and ask for those expenditures to be reimbursed by that grant
and was confused that you can't do that. So, you know, they've been educated since then, but, you know, those are things that we have found so that we're always watching for that, you know, and that, you know, in that case they actually adjusted their journal entries that they gave us. And it's like no, it appears that this was requested twice. And it's a federal grant so you
can't do that. You can't do that on a state, you can't do that on a federal. And, you know, that's when you want to say I think this is because they're new. I want to give them the benefit of the doubt in that way, but at the same time, you need to bring others in to the situation at that point and say, you know, are you aware that this is what's happening at your organization? And it becomes a different level.
And something from my perspective, those monthly reconciliation that I'm always talking about, it's not just a list of what's in the account that's still outstanding. It's understanding why that is still outstanding and confirming that it should be, you know, is your paraliabilities clearing each month? Are you actually paying everything that you've withheld? You know, different things like that. If there's something that is remaining is from a beginning balance,
why is that so? It can't. I don't like to see, you know, a line that says, beginning balance on a reconciliation because what is in that, you need to know what's in there in order to be able to clear it. So just knowing what's in the account and why it's there, to be able to know and ensure that the account is properly reconciled. Great. So what are some steps that school businesses can take to successfully prepare for an audit?
And how far in advance should they be doing that? I mean, I know there's a lot involved in terms of the school business official being involved, but there's also your treasurer, there's your payroll clerk, depending on the size of your district, other people in the business office, even other people in other departments. So what steps can an SBO take to really get ready for a successful audit? So for me, I start day one, July 1st, you know, that's the beginning of
our year. So, you know, that's really when you start the processes and ensure the processes are in place for your year end. Going through and making sure that you have your files where you want them filed. And I love electronic files because then we can just pop them in those drop boxes and
it's easy. So just ensuring that everybody understands where they're filing things, what the expectation is of how to file them, you know, your particular filing system, whether it be in a filing cabinet or electronically, just ensuring that those things are, everything is kind of done consistently so that you have, everybody knows where everything is. And you're able to access it easily and provide the information that's needed timely.
Great. So I'd also like to kind of explore a little bit further about the relationship between the school business officials, school district and the auditors. Can you tell me how you build and maintain trust between each other? I mean, Regina, you don't have a choice. You've got to have your books audited, but obviously you want to have a trusting relationship with your auditor. And, and Jean, I'm sure you want a smooth audit coming into a school district and a lot of that is
built on transparency and trust. So I'm curious, how do you even begin to build those relationships, especially maybe like you Regina, you're coming into a district as of July 1, maybe you're working with a different firm or a different auditor. How do you even begin to build those relationships? So I'll step back just a little bit because I have worked with Umpa Valley in this, this district as well as my previous district. So initially when working with them in the
previous district, I was very uncertain about their processes. Dropbox was unfamiliar to me at that point for the audit, the new Dropbox, but for the audit. And they had a smart sheet that we,
they wanted information on. I was not familiar with that process. So trying to adjust my processes that I was familiar with into what they were needing in order to work through their processes, there were a few bumps, but understanding having them communicate their needs to me as to why they needed certain things the way they were requesting them made it a little bit easier for me to kind of work through that process. Still don't like smart
sheets, but we're going to get around that. And so Gene, you know, you coming in as an house identity into a school district to perform the audit, there can be a little bit of anxiety, especially I'm sure if there's a new school business official or new department head, you know, to be responsible for the books that are being audited. How do you approach that relationship and build that trust? Well, for one thing, I have a firm belief that
most individuals are going to be wanting to do their best job. So you have to respect them and where they're at. Not everyone has the background that Regina has. She has incredible amounts of education and experience that creates a really good base there. That doesn't say that we
didn't have some discussions. We definitely walked through what was important with that. And by then, we hadn't known that she works very hard on her, by the time I got involved, we already understood that she works very hard on keeping the best set of books that she can. But we still had basically discussions about what was important and what's the best way to get
things done. But she came from a very knowledgeable base on that. And I think that coming from there, we can have a trust on where she's going and where she's going to bring an organization. But now that's where we have a long-term situation, being like three years now. When we have a new one and we have several new ones this year, you have, and we had several new ones last year, you go in and you have conversations about
your organization. And while you're doing that, you're kind of trying to be transparent from the beginning and using the things we're going to need. This is the way it is. You know, this is, this is what it is that we're looking for. And you evaluate. You learn to evaluate. They're the way that they respond to the answer. And with that, you try to meet them where they can understand. Because some of them, they don't have enough understanding of their
organization. I guess it's understanding the organization going back to that. And part of that is not just, you know, hey, we're in this town, we're in this school and whatever, it is what is the level of your experience of your business manager. What's the level of experience of your superintendent? And then understanding where they are coming from as much as you can. Because you may have to change the language. Sure.
You know, if you go in and you're talking to Regina, you can talk about high level, you can talk about high level accounting and finance things. She understands what's going on with that. For someone who's new, you end up breaking it down a whole lot more detail. To be able to step them through the process. Because if they don't understand what you're asking for, you're never going to meet in the middle. And so understanding the entity is not just the
organization. It's also the people involved who are trying to do the work, are trying to do everything. And you assume that they're going to try to do it right until proven differently. And so you're going to, you have to sometimes really, I don't want to say, maybe step, but you really take it, break the processes down, ask for the things in whatever language they understand. So, you know, that's kind of how we go about doing that.
Well, you know, Jeannie, make such a great point in the fact that not everyone's going to be as well-versed and knowledgeable as Regina, right? So I think that's going to be increasingly the case as district struggle to find qualified school business officials. So it's going to take a little bit more patience, a little bit more understanding on the auditors side of things to educate, right? I remember when I started as a school business official, I had little financial background.
I was a technology director. So had it not been for the grace of my auditors at the time to really help me understand the process at a macro level. But then once we were through the audit, understanding all the intricacies that go into it, I don't know that I'd be where I am today. And that, you know, I think that patience and that wanting to educate is such an important aspect. So I'm so happy to hear that that's really how you and your firm approach these audits as well.
So I always like to kind of explore some real world scenarios. So can you share with me a success story where maybe that collaboration between the SBO and the auditor really led to a successful audit outcome? And you know, what kind of lessons were learned from that process? The one that I mentioned earlier where there was a very important piece of an organization that or a very important piece of information that every organization must keep and have on file.
And we had an organization that surprisingly didn't because it was a misunderstanding of the prior people. And we had new people there. There are auditors and I have seen and read audit reports where that would have been, okay, they probably wouldn't have said anything to the to the auditee. And the auditee would find out that that was an issue whenever they got a finding on their single audit. So it's like to fix anything. Too late to fix anything and the people wouldn't
have even known. And you know, and I've seen that kind of thing happen a few times where it's like, you know, okay, in most cases, this could have been something that is going to be a strike on your organization. And you know, the individuals who are there are not responsible for the process and the procedure that was made or their understanding of it. They received the information from their predecessor. So it's not like one of them is trying to get out of
anything. But and they were very sure they were right, very sure that they were instructed. And so, you know, it's like, let's have a meeting. And it's like, you know, let's look at this. And what was the, what is the state regulation? What is the federal regulation? You know, what is the, what's the bully reds? You know, what are the regulations here? They all agree. And are you reading this the same way we are? And yeah, it took an hour or two before the front end.
But they'll never forget. And so we work through it and said, we can move forward if you change your process and provide us a signed, assigned new process that this has been shared with your superintendent. This has been presented. And so that you have corrected this item. And I mean, it wasn't, it wasn't like it was a financial item, even. It was just, you know, documents, document security. And so they could have had something that would leave uncertain feelings or
uncertain processes going forward about their organization. Or they can all choose to be educated. And let's move forward to improve. Because did it change the teaching of the school? No, did it change the financial data or the financial statement itself? No. It was, this is a process in looking through the internal controls. This was one that we found that needed to be fixed. And so, you know, they were very willing to do that. I believe that they felt that, you know,
I think that they felt assurance that they could bring us questions. First of all, they call me yesterday with questions. But this, you know, moving forward, it improved everybody's process. So for me, I think every year that you wind up with a audit report, financial statement that is compiled accurately, you have had a success. And that means that you have worked with your auditors, you've communicated
when there's questions, you have responded to those questions. And having the auditors come and say, hey, this is something that we're seeing. Is this something we need to be concerned about? You know, there's times that you can utilize your auditor to help change your district. So, if you see something that is not working well, you can work with the auditor. This is what's happening. This is something we would like for you to note. And they will work with you and ensure
that it's part of best practices. It's, you know, within their realm to do a recommendation. And then they will support you. So I think that that really helps as well. And helps to get those successful audits each year. I think it's a great point too. I think being able to rely on a third party to articulate best processes to your board and your superintendent can be really invaluable because you don't always want to be the one coming to them. I go, we need to do this.
We need to do that. It could be a little bit of a boy who cried well, if I guess. But to have an independent source common, say, listen, this is what you really need to do and change your processes is very powerful. So I'm glad you mentioned that. One other thing that you ask for success stories, one of the things that we've also try to do and it might even be my piece that I bring from my history is that the financial state that should tell the story of
the organization. And in doing so, sometimes some of the organizations are complicated. And if you can sit there and say, okay, here's a list of all the numbers here you go. But what does it really mean? Does it tell the story of the organization in the community that it exists? And so with that, sometimes we ask for additional things because if I'm going to read an audit report that I pull off the Secretary of State, what is it going to tell me about the
organization that's there? And what are the important items, other than I should know, to understand that organization? So sometimes there's additional things that are not purely financial that need to be in the audit to tell the story about how that organization either fits into its community or how it just important things about the organization that helps you understand. So let's talk a little bit about technology and its role in the auditing
process. For Juni, you mentioned Dropbox is a mechanism to kind of transfer files, but I think especially out of the past few years with the world shutting down, we were very much reliant on technology, the business operations didn't stop, but I think some of those trends with tech have continued. Can you tell our listeners really how technology has impacted the auditing process? And maybe talk to some specific tools and software that you use to kind of make sure that
the audits are smooth? So for me, having everything stored electronically on our servers is to me as key. I can access anything and everything at a drop of a hat and I can pull it all together into an audit folder and then simply drop that into the Dropbox for the auditors. That ensures that I know what I've dropped in that box because then once I've dropped it there, they do what they want to do with it. And I might not always remember what I've sent them. So I like to have a file
that this is what I've sent them. And anytime they ask for additional information, I put that in there so that the next year, I'll know what they're wanting and be able to add to that. I love to give read only access to my system so they can just get in there and look at whatever they want to look at. It's not always, it depends on what system you're using.
If it is user friendly versus complex, if it's complex, then you might not want to do that because it would be harder for them to work through figuring out the system than just simply doing the audit. But that's also a key. And I like to give read only access to as many things as
possible. So even the site, our ODE site where we do claiming, I like to give read only access to that so that they can get in, they can see our claims, they can see the reports from ODE without any questions or concerns. Well, I think I think too, I just want to comment. I think that really accomplishes two things back to when we are talking about how to ensure the accuracy of the data that you're providing.
They're seeing it in the system from the source, right? So that checks that box. And then second, that's reducing your burden, Regina, to go in and have to run reports and to get all this done because you're busy doing other things. So I think that's such a great point is to, if you can and you're able in the system is user friendly enough, give read only access because the auditors can get in there and take a look at the data themselves. They're not relying on you
to have to produce all of this all the time. And depending on the frequency, they could be bothering you every couple hours to say, hey, can you run this report? Can you grab this data? So that's such a great idea. And then, Gina and the auditing side of the coin, what kind of technologies have you seen trending to make your lives a little bit easier? And that relationship with the SBO just a little bit
more seamless? Well, it really helps whenever they are able to send us, you know, their general ledger in Excel. There are those that are still struggling and trying to send us information in PDF, which then we cannot load into our templates and actually be able to structure the data how we need. But so we rely heavily, unfortunately on Excel, unfortunately or unfortunately, it still is a huge basis of a lot of what we do. And having the drop box that is a struggle sometimes because
it's, it's there, it's good. We have, you know, someone who pulls the information across into our databases. And, and, you know, it may not be perfect. I've used other systems with share files and things like that, but they, they seem to be almost similar. But, you know, those are incredibly important for us in going forward as we are today. With IT, what, when, when I think about IT, there's actually, it goes down into the risk analysis portion. There's, we try to make sure that we
haven't, the organization has internal controls over their information. And one of the things we look at is understanding, you know, how locked down their organization is. We've had several organizations over the last few years who have had, you know, some sort of an IT break in, had someone steal their system, invariances of that, or, you know, audited them a year after they had to completely rebuild
that type of thing. So we asked questions about that. We look at information on that, but that is a challenge as we move forward with auditors, as auditors, is understanding and making sure that they have the right kind of cybersecurity for anything happening. And when we think IT, that's kind of where our brains are going at this point in time with, you know, how do we evaluate and trying to learn how to evaluate whether or not the securities are in place well enough
at each organization for them to be safe. Because there's a tremendous amount of work that's being done in a tremendous amount of secure information and information that should be secure at a school district. And having, you know, and what can they do and help them with what they can do to ensure that they have their information secure. And, you know, all the different kinds of sign-ons and how many times do you have to link into some other system to be able to get into
their system. That is schools are vulnerable. And so it's not just the G.L. but it can be the G.L. But it can be other systems as well. And that's important to every organization. It doesn't matter if it's a school or if it's a city, a county, any of them. And we have had schools and cities experience this devastating blow of having their information blocked or stolen from them. So
that's where I go whenever you talk about IT. Yeah, you know, it's it's tiny that you mentioned that cybersecurity is an increasing challenge for school districts and school business officials. And to your point, Gene, you said it great. We are very much vulnerable. We're an easy target for cyber criminals. We have an episode coming out in the next couple of weeks specific on cybersecurity. So very timely to bring that up. So I encourage anybody listening to tune in in the next week or so
as we talk about cybersecurity and some best practices there. But for today winding down, can you share any closing thoughts that you have and key takeaways and your experiences from working together and what what can school districts and auditors do to continue to improve the collaborative nature of just really their relationship and ensuring that their school districts have successful audits? So I'll start. I think staying calm is going to be okay. You're going to
hit through it. That's the that's the key. It takes a lot of time and energy to put into getting your audit, your books ready for the audit. You can do it. That's the that's the key. You can do it. Just one task at a time and remember to you know we've got a network. So if you have questions reach out to your network whether it be in the state or a destination. All of the SBOs are willing to support each other. So that's the key for me.
I was laughing Regina because you said stay calm. So I had kind of made a note about this very question. Mine was don't panic. Yeah right. So mine is don't panic. If you don't know what we're requesting, be feel free to ask a question. And you know and I told I told someone just yesterday. I mean I ran accounting offices for years in healthcare and what I used to tell people was there's no such thing as a dumb question. There are dumb mistakes because you didn't ask the question. So ask
ask if you have things. And you know and having a successful audit is more than like did you click all the right access. Right. This is a relationship that improves results. You know it's already hard enough to run a school. If you can have a relationship so that you can you know run ideas by ask questions and I'm not saying bother a whole lot. I mean just and we don't. We open the door and there's all you have few that come through during the year. It's just whenever they
say I've never seen this before. What do you think? What do you think we should do with this? But above all the openness and honesty transparency is really important because you know I've seen it where you don't know that someone has an issue with your organization until the audit report is directed to the board. Yeah. And I've seen that over and over again and I've talked to you
know the business officials who say well they never even asked me that. And you know and so because there was a question that wasn't asked about how they do things and then they said well you know you're going to like be the only one that touches this. She says but I'm not. And it's because that communication didn't happen. And so I think with that communication you know there's a whole lot to learn and gain from you know established relationship and being able to be open
and honest with each other. If I mean there's nothing wrong with saying how would you suggest we restructure this? We don't mind saying hey somebody else does it this way. Right. You know one of the things with running through all the single audits this past year and going through you know kind of want to ask the same questions of each one of the organizations to a certain amount. And we had two organizations that had like an outstanding updated set of procedures and I said can
we share these with our other organizations? With our other schools and they said yeah go ahead. And so it's kind of like hey here's our best practice list right here. And they don't mind if you go pull it from their website. You know then we'll see this next year how many organizations actually did that as we go through the 24 audits if they actually did change out and update you know based on what they learned from another organization. There's nothing wrong from learning
from each other. Yeah don't reinvent the wheel. I mean if a best practices out there or someone has been in your shoes and you can learn from them definitely jump in and do that. But at any rate Regina and Jean thank you both so much for joining me today. You've both shared some really invaluable knowledge and you know I'm excited to have my own successful audit because of this conversation. Thank you both again is a pleasure having you on. Thanks John. Thank you.
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