Participation in the Wisconsin Private School Choice Program (PSCP) requires four separate audit engagements throughout the year. For private school administrators, it is important to understand the timing and requirements of each audit to avoid potential noncompliance and unnecessary stress.

In this first article of our four-part PSCP series, we outline what to expect from each required audit and how they fit into your annual calendar so you can approach the year with confidence.

Required Wisconsin PSCP Audits

There are four separate audit engagements required for schools participating in PSCP.

• September Enrollment Audit
• Fiscal and Internal Control Practices
• January Enrollment Audit
• Financial Audit

September Enrollment Audit

This audit focuses on the September count date (the third Friday in September). In this engagement, auditors will review:

• School calendar
• Attendance records from the count date
• PI-1207
• Choice applications
• Student information system
• Tuition charged
• Summer school attendance
• Daycare attendees

Typically, this audit is completed by the auditors over two days in November. The report is due on December 15th.

Fiscal and Internal Control Practices

This audit focuses on testing the school’s policies and procedures and related controls over the following thirteen areas:

1. Financial accounting system
2. Budget
3. Expense payments
4. Employee compensation payments
5. Financial internal control systems
6. Government agency filing
7. Liability insurance
8. School bus
9. Alternative vehicle pupil transportation (i.e. shuttles)
10. Background checks
11. Fidelity bond
12. Employee education
13. Management letter

For a detailed look at each of the thirteen areas, I recommend watching my previous presentation, PSCP Fiscal and Internal Control Practices Audit. The presentation covers the purpose of testing, common issues and best practices for the Fiscal and Internal Control Practices Audit as well as a detailed look at the requirements and documentation auditors will request.

Required Policies and Documentation

This audit requires that you have the following four board-approved policies:

• Employee expense reimbursement
• Electronic fund transfer
• Eligible education expenses
• Immoral conduct

In addition to the required policies and procedures noted above, the school should have written documentation for the following:

• Financial/accounting handbook
• Employee handbook
• Conflict of interest policy
• Whistleblower policy
• Document retention and destruction policy
• Property and equipment capitalization policy

Typically, the audit is completed by the auditors in conjunction with the September Enrollment Audit. The report is due on December 15^th.

January Enrollment Audit

This audit focuses on the January count date (the second Friday in January). Auditors will test:

• School calendar
• Attendance records from the count date
• Changes in the student information system
• Tuition charged
• Daycare attendees

This audit is similar to the September Enrollment Audit; however, it requires a lot less preparation time on the client’s side and less testing time on the auditor’s side as applications are not reviewed during this audit.

Typically, the audit is completed by the auditors over one day in March. The report is due on May 1^st.

Financial Audit

The Financial Audit is similar to a standard external audit performed by a public accounting firm, with two key differences specific to the Wisconsin Private School Choice Program.

If your school has not previously undergone a financial statement audit, you may be wondering what that involves. In the simplest terms, a financial audit requires testing of financial statement balances such as cash, accounts payable, fixed assets, revenue, and expenses. For example, the auditor will verify the year-end cash balance by tracing it to bank statements and reconciliations.

However, the most common misconception is that, as auditors, we look at everything…but we don’t! Auditors determine a threshold used for testing based on the size of the organization. In addition, the auditors will assess each financial statement area and balance for what is considered risky.

For those of you that are familiar with financial audits, the two key differences for the PSCP Financial Audit are:

1. Property and Equipment

Schools are required to track both eligible and ineligible property and equipment.

Ineligible property and equipment includes items that are:

• Solely utilized for the church or daycare
• Not supported by documentation (i.e. an invoice)
• Donated

2. Reserve Schedule

It is a requirement to include a supplementary schedule with the audited financial statements that:

• Calculates total eligible education expenses
• Allocates those expenses between choice and non-choice pupils based on the average pupil counts from the September and January Enrollment Audits
• Compares choice eligible education expenses to choice revenue plus the beginning reserve balance to determine whether there is a positive or negative reserve

If the calculation results in a positive reserve, the school must maintain sufficient cash and investment balances equal to the reserve balance, less remaining depreciation on eligible fixed assets and land purchases for future school use that have not yet been included as eligible expenses.

A negative reserve indicates that eligible expenses exceeded choice revenue and beginning reserves. While this is not automatically a compliance issue, it is something administrators should monitor carefully as part of budgeting and cash flow planning.

Typically, fieldwork for the Financial Audit occurs in August or September, takes approximately three days, and the report is due to DPI by October 15.

Preparing for PSCP Audits

For each of these four separate audit engagements, a detailed preparation list is provided for each audit that will allow staff to prepare ahead of time. It is important that staff is available during the scheduled fieldwork times for follow-up questions and to provide the auditors with any additional requested information required as part of the audit.

Other Wisconsin PSCP Requirements

Participating in the Wisconsin Private School Choice Program requires completing the four audits described above. However, the audits are only part of the program’s overall requirements. The Department of Public Instruction (DPI) has additional deadlines and reporting responsibilities throughout the year.

DPI provides a detailed list of important dates under Private School Choice Programs – Information for Schools – School Important Dates on its website. Schools should review this calendar regularly to stay on track.

To manage these responsibilities, it is important to assign clear ownership for each task and track deadlines in one central place. This could be a shared spreadsheet with columns for the task, start date, due date, person responsible, and status. Some schools may prefer using Outlook tasks or project management software. The most important thing is having a consistent system and someone responsible for monitoring progress so deadlines are not missed.

With the right systems in place, meeting PSCP requirements becomes a manageable part of your annual routine. Our assurance advisors work with schools participating in the Wisconsin Private School Choice Program and can assist with audit preparation, compliance questions, and ongoing support throughout the year. Reach out to learn more.