Preparing for a Successful Audit

For charter school finance and operations leaders, audit season can feel like the culmination of an entire year's work. The strongest audits, however, are rarely the result of a last-minute push. They are built through consistent documentation, strong internal controls, and disciplined financial practices throughout the year.

That was the central message at the recent quarterly Business & Operations Networking (BON) cohort, where Chris Banta, Audit Partner, and Jessie Seibert, Audit Manager, of Hoelting & Co. shared four ways schools can reduce audit stress and strengthen their financial operations.  They include: building an audit-ready foundation, avoiding common audit findings, preparing for new GASB requirements, and keeping Form 990 filings aligned with audited financial statements.

A well-prepared audit not only reduces staff time and auditor questions, but also builds confidence with boards, authorizers, lenders, and the broader school community. 

Build an Audit-Ready Foundation

Don't wait until June to organize your books. The strongest audits are built through consistent financial discipline all year long.

That starts with maintaining detailed schedules for every major balance sheet account and ensuring those schedules tie directly to the general ledger. Schools should routinely review cash, receivables, prepaid expenses, accounts payable, payroll liabilities, accrued salaries, and unearned revenue to confirm balances are accurate and properly supported.

For government-wide reporting, schools should maintain current records for capital assets, long-term debt, leases, and subscription-based technology arrangements. Keeping those records updated throughout the year can save significant time when auditors arrive.

Pro Tip: Review the first 30 to 60 days of deposits and disbursements after fiscal year-end. This simple exercise often uncovers missing receivables or unpaid liabilities before the auditors do.

Strengthen Controls to Avoid Common Findings

Small process improvements can prevent the findings auditors see most often. That’s because many audit findings are not the result of major accounting errors; more often, they stem from limited staffing, inconsistent processes, or incomplete documentation.

One of the most common challenges is segregation of duties. In lean business offices, a small number of employees often handle multiple financial responsibilities. Whenever possible, schools should separate the functions of handling cash, issuing checks, recording transactions, and reconciling accounts.

The presenters also highlighted three practices that can help schools avoid common findings:

1. Complete and review bank reconciliations every month 

2. Maintain documentation and approvals for P-Card transactions, grants, and journal entries

3. Ensure grant expenditures and revenue are properly matched and all required reporting is completed on time

Throughout the discussion, Banta and Seibert returned to one central theme:

"Documentation is king, and it is critical to tie all supporting schedules back to your general ledger."

Well-documented processes reduce unnecessary audit questions and create greater confidence in a school's financial reporting. For schools with lean business offices, these small, consistent habits can prevent many of the issues auditors encounter most often. 

Prepare for New GASB Requirements

Three GASB updates are on the horizon. GASB 103 places greater emphasis on Management's Discussion and Analysis (MD&A), encouraging schools to better explain the story behind their financial results. GASB 104 adds disclosure requirements for certain capital assets, while GASB 105 provides new guidance for reporting significant events that occur after the fiscal year ends. 

School leaders should begin planning for these changes now rather than waiting for audit season.

Remember: Form 990 Matters Too

The final topic focused on Form 990 and the importance of ensuring it aligns with the school's audited financial statements. For those Colorado charter schools organized after August 6, 1997 as nonprofit corporations, this filing serves as an important public record of the organization's financial health. For those that are not set up as such, double check with your attorney on requirements. Consistency between Form 990 and the audited financial statements helps build credibility and avoid unnecessary questions.

Schools should also ensure they are prepared to complete the supporting schedules that often accompany the filing, including those related to public support, major contributors, supplemental financial information, fundraising activities, executive compensation, tax-exempt bonds, and related organizations.

Five Things to Do this Month

As the session concluded, Banta and Seibert left attendees with a clear message: successful audits are built through steady habits, not year-end scrambling. Finance and operations leaders can strengthen their audit readiness by:

1. Completing and reviewing all bank reconciliations

2. Reviewing outstanding receivables and payables

3. Organizing documentation for grants, P-Cards, and journal entries

4. Beginning preparations for new GASB reporting requirements

5. Coordinating Form 990 preparation with the annual audit process

Successful audits are the product of strong systems, not last-minute effort. By investing in documentation, internal controls, and proactive planning throughout the year, charter school leaders can reduce audit stress and devote more time to what matters most: supporting students and staff.

For the 2026–27 school year, the BON cohort will merge with the Finance & Operations Networking cohort, creating a single forum dedicated to supporting efficient, sustainable, and high-quality charter school operations. Led by Jennifer Larson, the cohort is open to CSP grant recipients, Business Managers, and Directors of Finance or Operations at League member schools. For more information, please email [email protected].