Financial audits are designed to provide reasonable assurance that the financial statements fairly present the district's financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. Compliance audits may include determining whether the district has adhered to the specific requirements of state and federal granting agencies. A local certified public accounting firm performs the district's annual financial and compliance audit. Although external audits are required as a matter of law, many Texas school districts also recognize the need for an internal audit function. Internal auditing is considered an essential function in both government and corporate organizations.
Internal auditors carry the work of external auditors a step further.
While external auditors are primarily concerned with the financial aspects of the organization, internal auditors help management improve the organization's performance through compliance with organizational policies and procedures, evaluation of internal controls, and identification of inefficient, unproductive, and fraudulent processes. KISD's auditors issued a qualified opinion on the district's 1997-98 financial statements. When auditors issue a qualified opinion, they are in effect saying that the financial statements comply with GAAP except for a certain condition. The auditors qualified their opinion due to insufficient audit evidence to support disclosures related to the year 2000 issue. The qualified opinion was in response to a rule the GASB issued in October 1998 regarding year 2000 disclosures.