Section PI 35.046 - Financial audit requirements(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. Wis. Admin. Code Department of Public Instruction PI 35.046
Emerg. cr. eff. 8-5-98; cr. Register, February, 1999, No. 518, eff. 3-1-99; emerg. am. (1) (b), (2) (b) 2. to 4. and 6., eff. 1-28-02; CR 02-023: am. (1) (b), (2) (b) 2., 3., 4. and 6., Register August 2002 No. 560, eff. 9-1-02; CR 04-076: r. and recr. Register October 2005 No. 598, eff. 11-1-05.