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New auditing standard for Hartselle BOE

By Deangelo McDaniel 340-2469

HARTSELLE — The way the Hartselle school system conducts audits will change regardless of whether the board changes auditing firms.

That's what the auditor who audited the school system's books for the 2005-06 academic year told the board.

"Right now, we are part of your control standards," Anthony Law of Wear, Howell, Strickland, Quinn and Law said.

The new rule called State on Auditing Standards No. 112 will require school boards to remove auditors as part of the control.

Hartselle, Law said, will have to adopt standards that will catch mistakes that auditors normally catch.

This means board members will have to learn what school journal entries are and how they work. The financial entries will have to be detailed and part of the audit.

"You may want to educate yourself," Law warned the board.

Law said the city school board must learn how finances work so that outside auditors are no longer part of the control system.

"This is going to be your responsibility," he said, referring to the board members.

Law said the new standard came about because of accounting scandals like the one at Enron.

Basically, the school system is going to have to prepare an audit like the one he presented Monday night.

The outside auditor will then check to make sure the information in the report is correct, Law said.

"You will have the report ready when we show up," he said. "It's got to be prepared footnote and all."

Hartselle must have control standards in place by the end of the 2007-08 fiscal year.

"My first impression is that it sounds like the buck is getting passed to us," board Chairman Dr. Andrew Dukes said.

"What has happened is the client has gotten used to the auditor helping close the books," Law responded. "This new standard is trying to delineate the line between auditor and school board."

At the request of Dr. Dukes, Law agreed to meet with the board in a work session to discuss the matter.

Law said auditing firms will be able to continue to assist the school system, but this will show as a finding in the audit.

"This finding will probably be in a lot of audits because some won't be willing, capable or both of meeting the new standards," he said.

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