As we get ready to head into the winter audit season for Arizona school districts, auditors will be completing an updated version of the Uniform System of Financial Records (USFR) Compliance Questionnaire (CQ) as part of your audit. As a reminder, the completed USFRCQ must be submitted with the audit reporting package to the Arizona Office of the Auditor General. School districts should be aware of the changes and take the proper steps now to ensure you are in compliance.
To help prepare you for the upcoming audit season, our Arizona school district specialists have developed the following summary of the most impactful 2020 USFR CQ changes:
NEW FORMATTING AND SECTION HEADINGS
You’ll notice that the 2020 USFR Compliance questionnaire looks very different from 2019. It has been updated for statutory changes, the number of questions has been reduced and auditor review procedures have been added. There may be additional questions your auditors will ask based on these changes, such as, “How many student activity deposits were made during the fiscal year?” Take some time to familiarize yourself with the updated CQ prior to your audit.
- GBMP03 and GBMP04: Conflict-of-Interest
Districts must annually obtain conflict-of-interest (COI) forms from all employees and memorialize those with conflicts in a separate file. It is key that COI forms go out to ALL employees. Auditors will review the COI forms and management’s review of the forms to determine if information was adequately disclosed and considered for decision making. They will also ensure that the file is maintained and available electronically or hard copy.
- PRO17: Procurement
This new question reviews whether the district provided training and guidance related to restrictions on soliciting, accepting, or agreeing to accept any personal gift or benefit with a value of $300 or more. Auditors will be determining whether the most pertinent employees (those who supervise other employees or participate in the planning, recommending, selecting or contracting for materials, services, goods, construction, or construction services of a school district or school purchasing cooperative) received this training and guidance. Note that this is a requirement starting after 7/1/2020, so districts should be implementing it now.
- PAY07: Payroll
Districts must have valid fingerprint clearance cards on file for all required personnel and a method in place to identify employees whose cards were going to expire. Although this has always a requirement, auditors will now be looking for fingerprint clearance cards, which they may not have specifically asked for in the past.
- FR07 and FR07: Financial Reporting
This new question asks whether districts include average teacher salary on their website, as well as a copy of or a link to the District’s page from the most recent Auditor General’s District Spending Report. These two items should be added to your District’s website if they are not currently included. Districts must submit the School District Employee Report (SDER) to the Arizona Department of Education, and it must be accurate and timely. Auditors are now required to review the submission of the SDER reports as well as the supporting schedules. To receive a “yes” on this question, auditors must find that the District filed the SDER report with the Arizona Department of Education by October 15 and corrections were made within the February 1 to March 1 deadline.
- IT06: Information Technology
Districts must schedule and perform backup-control procedures for all critical systems at least annually to ensure uninterrupted operations and minimal loss of data. Auditors must now determine if the system backup procedures included a test of the backup reliability and integrity; that backup copies were stored in separate facilities or in a fire-rated container; and that backups were scheduled for a defined time or period.
While this is not a comprehensive list of changes to the USFRCQ for 2020, these are the most notable and represent real changes to the auditor review procedures. By taking the time to review these new questions and ensure your district is in compliance, you reduce the risk of receiving a deficiency on your upcoming audit.