Wisconsin Administrative Code
Department of Public Instruction
Chapter PI 35 - Milwaukee Parental Choice Program
Section PI 35.046 - Financial audit requirements
Universal Citation: WI Admin Code ยง PI 35.046
Current through August 26, 2024
(1) A private school under this chapter shall do all of the following:
(a) Annually by September 1 following a
school year in which the private school participated in the choice program, the
private school shall submit to the department an independent financial audit of
the private school conducted by a certified public accountant accompanied by
the auditor's opinion statement that the financial information report required
under s.
PI 35.045 is free from material misstatement and the
private school's per pupil cost and any payment adjustment is fairly presented.
The audit under this subdivision shall be limited in scope to those records
that are necessary for the department to make payments under s.
119.23(4) and (4m), Stats.
(b) Have a written engagement agreement, a
copy of which shall be provided to the department upon request, with any
auditor providing services required by this chapter. The written agreement
shall contain all of the following:
1. A
statement that the auditor shall comply with generally accepted auditing
standards and the requirements of this chapter. The written agreement shall
also specify that the auditor shall comply with generally accepted governmental
auditing standards if required by other government agencies providing funds to
the private school.
2. The
responsibilities of the private school and the auditor in meeting the
requirements of this chapter.
3.
Any other services in addition to those required by this chapter that the
auditor is providing to the private school.
4. The auditor's acknowledgement that the
auditor is aware that the department will rely on the work of the auditor in
fulfilling its requirements under this chapter.
5. The auditor's compensation for the
services the auditor is providing the private school.
(c) Balance the financial accounting system
required under s.
PI 35.047(1) and provide the auditor
with a trial balance of account balances.
(d) Furnish all other financial and pupil
records the auditor considers necessary to provide the audit opinion
statement.
(e) Approve adjusting
entries recommended by the auditor recorded in the private school's financial
accounting records.
(f) Retain all
financial records relating to the report required under s.
PI 35.045 for at least 3 years from the date of the
department's certification of the financial information report under s.
PI 35.045(1) (g) 3. unless required to
retain such records longer by the department or a law enforcement
agency.
(g) Provide the department
access to original records referenced in the auditor's working papers and
provide copies as requested by the department.
(2) The auditor engaged by the private school to provide the opinion statement under sub. (1) shall develop a written audit program identifying the steps and procedures followed in conducting the audit. The audit program shall include all the procedures specified in sub. (3) and such other procedures agreed upon by the auditor and the department, and any other procedures the auditor considers necessary to fulfill professional responsibilities. The auditor shall retain working papers relating to audits under this section at least 3 years from the date of the department's certification of the financial information report under s. PI 35.045(1) (g) 3. unless requested to retain the working papers longer by the department or a law enforcement agency.
(3)
(a) The auditor shall determine that the
financial report is free from material misstatement by performing procedures
that in the auditor's judgment, provide reasonable assurance that the report
does not contain misapplications of accounting requirements, departures from
fact, or other errors or omissions. The auditor, in performing audit procedures
to determine the report required under s.
PI 35.045(1) is free from material
misstatement, shall consider account balances and total non-payroll related
transactions with any one party to be significant if they exceed the following:
1. If the private school's net eligible
educational programming cost as determined under s.
PI 35.045(1) (g) is less than $100,000,
the variance limitation shall be 4% of the reported costs.
2. If the private school's net eligible
educational programming cost as determined under s.
PI 35.045(1) (g) is at least $100,000
but less than $1,000,000, the variance limitation shall be 2% of the reported
costs.
3. If the private school's
net eligible educational programming cost as determined under s.
PI 35.045(1) (g) is at least $1,000,000
but less than $3,000,000, the variance limitation shall be 1.5% of the reported
costs.
4. If the private school's
net eligible educational programming cost as determined under s.
PI 35.045(1) (g) is at least $3,000,000
but less than $5,000,000, the variance limitation shall be 1% of the reported
costs.
5. If the private school's
net eligible educational programming cost as determined under s.
PI 35.045(1) (g) is at least $5,000,000
but less than $10,000,000, the variance limitation shall be .7% of the reported
costs.
6. If the private school's
net eligible educational programming cost as determined under s.
PI 35.045(1) (g) is at least
$10,000,000, the variance limitation shall be .5% of the reported
costs.
(b) The auditor
shall consider accounts with a balance equal to at least 75% and individual
transactions equal to at least 20% of the variance limitation amount determined
under par. (a) as being significant and shall perform tests of those accounts
and transactions along with other procedures considered necessary to conclude
that the accounts and transactions do not contain misstatements whose effect,
when aggregated with misstatements in other accounts and transactions, would
exceed the variance limitation identified under par. (a) and result in a
material misstatement in the private school's net eligible educational
programming cost as determined under s.
PI 35.045(1) (g).
(c) The auditor shall determine if fees
charged pupils are allowed as specified under s.
PI 35.03(6)
(a).
(d) The auditor shall perform all of the
following regarding the private school's cash and investment balances:
1. Confirm the private school's cash and
investment account balances with depositories.
2. Prepare or obtain and examine a
reconciliation of confirmed cash and investment account balances to the private
school's accounting records. The reconciliation shall include all of the
following:
a. Depository balances at the
beginning of the fiscal period reconciled to the private school's accounting
records.
b. Receipts per depository
statement reconciled to the private school's accounting records.
c. Disbursements per depository statements
reconciled to the private school's accounting records.
d. Depository balances at the end of the
fiscal period reconciled to the private school's accounting records.
(e) Prepare or obtain
and examine a reconciliation of payroll with holdings to remittances to
authorized agencies or taxing authorities.
(f) Trace all entries on the financial
information report required under s.
PI 35.045(1) to the trial balance
provided by the school under sub. (1) (c).
(4) The auditor engaged under this section shall comply with the requirements of s. Accy 1.101, and with all of the following:
(a) An auditor
providing financial statement compilation or review services to the private
school may not perform the audit under sub. (1) (a) unless the private school
makes available a trial balance, based on the school's general ledger
established as part of financial accounting system under s.
PI 35.047(1), for the compilation or
review services.
(b) An auditor
that performs the audit under sub. (1) (a) or compilation or review services
under par. (a) may not post, or prepare for posting, original or source
document transactions such as cash receipts and disbursements, invoices or
billings for services, billings from vendors and suppliers, payroll activity
and other typical reoccurring financial transactions to the private school's
general ledger.
(c) The auditor
may prepare and post adjusting, correcting, and closing journal entries to the
private school's general ledger that have the written approval of the private
school's management. The auditor's working papers shall document evidence of
management approval for all such entries resulting from financial statement
compilation, review or audit.
(d)
The auditor may assist in the preparation of the budget required under s.
PI 35.047(2)
(b). In providing assistance, the auditor
shall comply with s.
Accy 1.201, regarding forecasts, and shall identify as
required by the department, that such assistance was
provided.
(5) The auditor engaged under sub. (1)(a) shall evaluate whether there is substantial doubt about the private school's ability to continue as a going concern for a reasonable period of time. If after considering identified conditions and events and plans of the private school's management, the auditor concludes that substantial doubt about the private school's ability to continue as a going concern for a reasonable period of time remains, the auditor's report shall include an explanatory paragraph in the opinion statement required under sub. (1) (a) to reflect that conclusion.
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