Rock University High School (A Charter School and Component Unit of the School District of Janesville, Wisconsin)

COMMUNICATION TO THOSE CHARGED WITH GOVERNANCE AND MANAGEMENT

As of and for the Year Ended June 30, 2019

Rock University High School TABLE OF CONTENTS

• Required Communication of Internal Control Related Matters Identified in the Audit to Those Charged with
• Governance  Internal Controls Over Financial Reporting 
• Other Communications with Those Charged with Governance
• Two Way Communication Regarding Your Audit
•  Required Communications by the Auditor to Those Charged with Governance
• Management Representations

REQUIRED COMMUNICATION OF INTERNAL CONTROL RELATED MATTERS IDENTIFIED IN THE AUDIT TO THOSE CHARGED WITH GOVERNANCE

Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities.

To the Governance Council Rock University High School Janesville, Wisconsin In planning and performing our audit of the financial statements of the Rock University High School Charter School (“School”), a component unit of the School District of Janesville, Wisconsin, as of and for the year ended June 30, 2019, in accordance with auditing standards generally accepted in the United States of America, we considered its internal control over financial reporting (internal control) as a basis for designing our auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of its internal control. Accordingly, we do not express an opinion on the effectiveness of its internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as discussed below, we identified certain deficiencies in internal control that we consider to be material weaknesses.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected, on a timely basis. We consider the following deficiency in the School’s internal control to be a material weakness, as discussed further on the following page

• Internal Controls over Financial Reporting

This communication is intended solely for the information and use of the Board of Education, management, and others within the organization and is not intended to be, and should not be, used by anyone other than these specified parties.

Baker Tilly US, LLP (formerly known as Baker Tilly Virchow Krause, LLP) Milwaukee, Wisconsin October 13, 2020

Auditing standards require that we perform procedures to obtain an understanding of your government and its internal control environment as part of the annual audit. This includes an analysis of significant transaction cycles and an analysis of the School’s year-end financial reporting process and preparation of your financial statements.

INTERNAL CONTROL OVER FINANCIAL REPORTING

Properly designed systems of internal control provides your organization with the ability to process and record monthly and year end transactions and prepare annual financial reports. Our audit includes a review and evaluation of the School’s internal controls relating to financial reporting. Common attributes of a properly designed system of internal control for financial reporting are as follows:

• There is adequate staffing to prepare financial reports throughout and at the end of the year.
• Staff is properly trained and knowledgeable to perform all financial reporting functions.
• Complete and accurate financial statements including footnotes are prepared.
• Financial reports are reviewed by an individual who is not the preparer for completeness and accuracy.

Due to limited resources of the School, our evaluation of the School’s internal controls over financial reporting has identified control deficiencies that are considered a material weakness surrounding the preparation of complete and accurate financial statements and footnotes.

Management has not prepared financial statements that are in conformity with generally accepted accounting principles.

This level of internal control over financial reporting can be a difficult task for government that operate with only enough staff to process monthly transactions and reports, and often rely on their auditors to prepare the financial statements.

OTHER COMMUNICATIONS TO THOSE CHARGED WITH GOVERNANCE 

TWO WAY COMMUNICATION REGARDING YOUR AUDIT

As part of our audit of your financial statements, we are providing communications to you throughout the audit process. Auditing requirements provide for two-way communication and are important in assisting the auditor and you with more information relevant to the audit.

As this past audit is concluded, we use what we have learned to begin the planning process for next year’s audit. It is important that you understand the following points about the scope and timing of our next audit:

• We address the significant risks or material misstatements, whether due to fraud or error, through our detailed audit procedures.
• We will obtain an understanding of the five components of internal control sufficient to assess the risk of material misstatement of the financial statements or material noncompliance related to state awards whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures. We will obtain a sufficient understanding by performing risk assessment procedures to evaluate the design of controls relevant to an audit of financial statements and to determine whether they have been implemented. We will use such knowledge to:
  • Identify types of potential misstatements or noncompliance.
  • Consider factors that affect the risks of material misstatement or material noncompliance.
  • Design tests of controls, when applicable, and substantive procedures.

Our audit will be performed in accordance with U.S. generally accepted auditing standards, Government Auditing Standards, and the Wisconsin Public School District Audit Manual.

We will not express an opinion on the effectiveness of internal control over financial reporting or compliance with laws, regulations, and provisions of contracts or grant programs. For audits done in accordance with Government Auditing Standards, and the Wisconsin Public School District Audit Manual, our report will include a paragraph that states that the purpose of the report is solely to describe

• the scope of testing of internal control over financial reporting and compliance and the result of that testing and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance,
• the scope of testing internal control over compliance for major programs and major program compliance and the result of that testing and to provide an opinion on compliance but not to provide an opinion on the effectiveness of internal control over compliance and,
• that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering internal control over financial reporting and compliance and the Wisconsin Public School District Manual in considering internal control over compliance and major program compliance. The paragraph will also state that the report is not suitable for any other purpose.

The concept of materiality recognizes that some matters, either individually or in the aggregate, are important for fair presentation of financial statements in conformity with generally accepted accounting principles or for reporting material noncompliance while other matters are not important. In performing the audit, we are concerned with matters that, either individually or in the aggregate, could be material to the financial statements or to the entity’s federal and state awards. Our responsibility is to plan and perform the audit to obtain reasonable assurance that material misstatements or material noncompliance, whether caused by errors or fraud, are detected.

We address the significant risks of material noncompliance, whether due to fraud or error, through our detailed audit procedures.

We will obtain an understanding of the five components of internal control sufficient to assess the risk of material noncompliance related to the federal and state awards whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures. We will obtain a sufficient understanding by performing risk assessment procedures to evaluate the design of controls relevant to an audit of the federal and state awards and to determine whether they have been implemented. We will use such knowledge to:

• Identify types of potential noncompliance.
• Consider factors that affect the risks of material noncompliance
• Design tests of controls, when applicable, and other audit procedures.

Our audit will be performed in accordance with U.S. generally accepted auditing standards, Government Auditing Standards and the Wisconsin Public School District Audit Manual. We will not express an opinion on the effectiveness of internal control over financial reporting or compliance with laws, regulations, and provisions of contracts or grant programs. For audits done in accordance with Government Auditing Standards and the Wisconsin Public School District Audit Manual, our report will include a paragraph that states that the purpose of the report is solely to describe

• the scope of testing of internal control over financial reporting and compliance and the result of that testing and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance,
• the scope of testing internal control over compliance for major programs and major program compliance and the result of that testing and to provide an opinion on compliance but not to provide an opinion on the effectiveness of internal control over compliance and,
• that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering internal control over financial reporting and compliance and Government Auditing Standards and the Wisconsin Public School District Audit Manual in considering internal control over compliance and major program compliance. The paragraph will also state that the report is not suitable for any other purpose.

The concept of materiality recognizes that some matters, either individually or in the aggregate, are important for reporting material noncompliance while other matters are not important. In performing the audit, we are concerned with matters that, either individually or in the aggregate, could be material to the entity’s federal and state awards.

Our responsibility is to plan and perform the audit to obtain reasonable assurance that material noncompliance, whether caused by error or fraud, is detected. We are very interested in your views regarding certain matters. Those matters are listed here:

• We typically will communicate with your top level of management unless you tell us otherwise.
• We understand that the Board of Education has the responsibility to oversee the strategic direction of your organization, as well as the overall accountability of the entity. Management has the responsibility for achieving the objectives of the entity.
• We need to know your views about your organization’s objectives and strategies, and the related business risks that may result in material misstatements.
• Which matters do you consider warrant particular attention during the audit, and are there any areas where you request additional procedures to be undertaken?
• Have you had any significant communications with regulators or grantor agencies?
• Are there other matters that you believe are relevant to the audit of the financial statements?

 TWO WAY COMMUNICATION REGARDING YOUR AUDIT

 Also, is there anything that we need to know about the attitudes, awareness, and actions of the School concerning:

• The School’s internal control and its importance in the entity, including how those charged with governance oversee the effectiveness of internal control?
• The detection or the possibility of fraud? We also need to know if you have taken actions in response to developments in financial reporting, laws, accounting standards, governance practices, or other related matters, or in response to previous communications with us.

With regard to the timing of our audit, here is some general information. If necessary, we may do preliminary audit work during the months of May-June, and sometimes early July.

Our final financial fieldwork is scheduled during the summer to best coincide with your readiness and report deadlines. After fieldwork, we wrap up our financial audit procedures at our office and may issue drafts of our report for your review. Final copies of our report and other communications are issued after approval by your staff. This is typically 6-12 weeks after final fieldwork, but may vary depending on a number of factors.

Keep in mind that while this communication may assist us with planning the scope and timing of the audit, it does not change the auditor’s sole responsibility to determine the overall audit strategy and the audit plan, including the nature, timing, and extent of procedures necessary to obtain sufficient appropriate audit evidence. We realize that you may have questions on what this all means, or wish to provide other feedback. We welcome the opportunity to hear from you.

REQUIRED COMMUNICATIONS BY THE AUDITOR TO THOSE CHARGED WITH GOVERNANCE

Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. 6 To the Governance Council Rock University High School Janesville, Wisconsin Thank you for using Baker Tilly US, LLP as your auditor.

We have completed our audit of the financial statements of the Rock University High School (the “School”), a component unit of the School District of Janesville, Wisconsin for the year ended June 30, 2019 and have issued our report thereon dated October 13, 2020. This letter presents communications required by our professional standards.

OUR RESPONSIBILITY UNDER AUDITING STANDARDS GENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA AND GOVERNMENT AUDITING STANDARDS

The objective of a financial statement audit is the expression of an opinion on the financial statements. We conducted the audit in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards. These standards require that we plan and perform our audit to obtain reasonable, rather than absolute, assurance about whether the financial statements prepared by management with your oversight are free of material misstatement, whether caused by error or fraud.

Our audit included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit does not relieve management or the Board of Education of their responsibilities.

As part of the audit we obtained an understanding of the entity and its environment, including internal control, sufficient to assess the risks of material misstatement of the financial statements and to design the nature, timing and extent of further audit procedures. The audit was not designed to provide assurance on internal control or to identify deficiencies in internal control.

As part of obtaining reasonable assurance about whether the financial statements are free of material misstatement, we performed tests of the School’s compliance with certain provisions of laws, regulations, contracts, and grants. However, the objective of our tests was not to provide an opinion on compliance with such provisions.

OTHER INFORMATION IN DOCUMENTS CONTAINING AUDITED FINANCIAL STATEMENTS

Our responsibility does not extend beyond the audited financial statements identified in this report. We do not have any obligation to and have not performed any procedures to corroborate other information contained in client prepared documents, such as official statements related to debt issues.

PLANNED SCOPE AND TIMING OF THE AUDIT

We performed the audit according to the planned scope and timing previously communicated to you in our Communication to Those Charged with Governance and Management.

QUALITATIVE ASPECTS OF THE ENTITY’S SIGNIFICANT ACCOUNTING PRACTICES

Accounting Policies Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the School are described in Note I to the financial statements.

No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by the School during the year that were both significant and unusual, and of which, under professional standards, we are required to inform you, or transactions for which there is a lack of authoritative guidance or consensus.

Accounting Estimates Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. There were no estimates included in the School’s financial statements. Financial Statement Disclosures The disclosures in the notes to the financial statements are neutral, consistent, and clear.

DIFFICULTIES ENCOUNTERED IN PERFORMING THE AUDIT

We encountered no significant difficulties in dealing with management in performing our audit.

CORRECTED AND UNCORRECTED MISSTATEMENTS

Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no misstatements identified.

DISAGREEMENTS WITH MANAGEMENT

For purposes of this letter, professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.

CONSULTATIONS WITH OTHER INDEPENDENT ACCOUNTANTS

In some cases, management may decide to consult with other accountants about auditing and accounting matters. If a consultation involves application of an accounting principle to the governmental unit’s financial statements or a determination of the type of auditors’ opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.

MANAGEMENT REPRESENTATIONS

We have requested certain representations from management that are included in the management representation letter. This letter follows this required communication.

INDEPENDENCE

We are not aware of any relationships between Baker Tilly US, LLP and the School that, in our professional judgment, may reasonably be thought to bear on our independence. Relating to our audit of the financial statements of the School for the year ended June 30, 2019, Baker Tilly US, LLP hereby confirms that we are, in our professional judgment, independent with respect to the School in accordance with the Code of Professional Conduct issued by the American Institute of Certified Public Accountants.

We provided no services to the School other than audit services provided in connection with the audit of the current year’s financial statements and the following nonaudit services which in our judgment do not impair our independence:

• Financial statement preparation
• Trial balance formatting from general ledger data None of these nonaudit services constitute an audit under generally accepted auditing standards, including Government Auditing Standards.

OTHER AUDIT FINDINGS OR ISSUES

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the School’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

RESTRICTION ON USE

This information is intended solely for the use of the Board of Education, Department of Public Instruction and management and is not intended to be, and should not be, used by anyone other than these specified parties. We welcome the opportunity to discuss the information included in this letter and any other matters. Thank you for allowing us to serve you. Baker Tilly US, LLP (formerly known as Baker Tilly Virchow Krause, LLP) Milwaukee, Wisconsin October 13, 2020 MANAGEMENT REPRESENTATIONS

Reporting and insights from 2020 audit:
Rock University High School

(A Charter School and Component Unit of the School District of Janesville, Wisconsin) June 30, 2020

Executive summary

To the governance council:
We have completed our audit of the financial statements of the Rock University High School Charter School (the School) for the year ended June 30, 2020, and have issued our report thereon dated
November 11, 2020. This letter presents communications required by our professional standards. Your audit should provide you with confidence in your financial statements. The audit was performed
based on information obtained from meetings with management, data from your systems, knowledge of your School’s operating environment and our risk assessment procedures. We strive to provide you clear, concise communication throughout the audit process and of the final results of our audit.

Additionally, we have included information on key risk areas the Rock University High School Charter School should be aware of in your strategic planning. We are available to discuss these risks as they
relate to your organization’s financial stability and future planning. If you have questions at any point, please connect with us:
Wendi Unger, Partner: Wendi.Unger@bakertilly.com or +1 (414) 777 5423
Sincerely,
Baker Tilly US, LLP (formerly known as Baker Tilly Virchow Krause, LLP)
Wendi M. Unger, CPA, Partner

Table of contents

Executive summary	Audit status	Key areas of focus and significant findings	Accounting changes relevant to the School	Data privacy
Audit objectives	Significant changes to the audit plan	Internal control matters	Trending challenges for schools	Appendix A: Client service team
Our responsibilities	Audit approach and results	Required communications	COVID-19 Risks and ongoing response	Appendix B: Management representation letter
Management's responsibilities	Planned scope and timing	Nonattest services	Cybersecurity	Appendix C: Two-way communication regarding your audit

THIS COMMUNICATION IS INTENDED SOLELY FOR THE INFORMATION AND USE OF THE GOVERNANCE COUNCIL, AND, IF APPROPRIATE, MANAGEMENT, AND IS NOT INTENDED TO BE AND SHOULD NOT BE USED BY ANYONE OTHER THAN THESE SPECIFIED PARTIES.

Audit objectives

Rock University High School | 2020 Audit 11/11/2020 © 2020 Baker Tilly US, LLP 

Our responsibilities

As your independent auditor, our responsibilities include:

• Planning and performing the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Reasonable assurance is a high level of assurance.
• Assessing the risks of material misstatement of the financial statements, whether due to fraud or error. Included in that assessment is a consideration of the School’s internal control over financial reporting.
• Performing appropriate procedures based upon our risk assessment.
• Evaluating the appropriateness of the accounting policies used and the reasonableness of significant accounting estimates made by management.
• Forming and expressing an opinion based on our audit about whether the financial statements prepared by management, with the oversight of the governance council:
• Are free from material misstatement
• Present fairly, in all material respects, and in accordance with accounting principles generally accepted in the United States of America
• Performing tests related to compliance with certain provisions of laws, regulations, contracts and grants, as required by Government Auditing Standards

We are also required to communicate significant matters related to our audit that are relevant to the responsibilities of the governance council, including:

• Qualitative aspects of the School’s accounting practice including policies, accounting estimates and financial statement disclosures
• Significant difficulties encountered
• Disagreements with management
• Corrected and uncorrected misstatements
• Internal control matters
• Significant estimates
• Other findings or issues arising from the audit

Rock University High School | 2020 Audit 11/11/2020

Management's responsibilities

Management	Auditor
Prepare and fairly present the financial statements	Our audit does not relieve management or the governance council of their responsibilities
Establish and maintain effective internal control over financial reporting and compliance with laws, regulations, contracts and grants	An audit includes consideration of internal control over financial reporting, but not an expression of an opinion on those controls
Provide us with written representations at the conclusion of the audit	See Appendix for a copy of management's representations

 

Audit status

Significant changes to the audit plan:
There were no significant changes made to either our planned audit strategy or to the significant risks and other areas of emphasis identified during the performance of our risk assessment procedures.

Audit approach and results

Planned scope and timing
Audit focus
Based on our understanding of the School and environment in which you operate, we focused our audit
on the following key areas:

• Key transaction cycles
• Areas with significant estimates
• Implementation of new accounting standards

Our areas of audit focus were informed by, among other things, our assessment of materiality. Materiality in the context of our audit was determined based on specific qualitative and quantitative factors combined with our expectations about the School’s current year results.

• Key areas of focus and significant findings
• Significant risks of material misstatement

A significant risk is an identified and assessed risk of material misstatement that, in the auditor’s professional judgment, requires special audit consideration. Within our audit, we focused on the following
area below

Significant risk areas	Testing approach	Conclusion
Management override of controls	Incorporate unpredictability into audit procedures, emphasize professional skepticism and utilize audit team with industry expertise	Procedures identified provided sufficient evidence for our audit opinion

Other key areas of emphasis 
We also focused on other areas that did not meet the definition of a significant risk, but were determined to require specific awareness and a unique audit response.

Other key areas of emphasis

• Cash and investments Revenues and receivables
• General disbursements
• Payroll
• Net position calculations
• Financial reporting and required disclosures
• Capital assets

Internal control matters

We considered the School’s internal control over financial reporting as a basis for designing our audit procedures for the purpose of expressing our opinions on the financial statements. We are not expressing an opinion on the effectiveness of the School’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and, therefore, material weaknesses or significant deficiencies may exist that were not identified.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct misstatements on a timely basis.

A material weakness is a deficiency or combination of deficiencies in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be
prevented, or detected and corrected, on a timely basis. We did not identify any deficiencies in internal control that we consider to be material weaknesses.

Financial Statement Close Process

Properly designed systems of internal control provide your organization with the ability to process and record accurate monthly and year-end transactions and annual financial reports.

Our audit includes a review and evaluation of the internal controls relating to financial reporting. Common attributes of a properly designed system of internal control for financial reporting are as follows:

• There is adequate staffing to prepare financial reports throughout the year and at year-end.
• Material misstatements are identified and corrected during the normal course of duties.
• Complete and accurate financial statements, including footnotes, are prepared.
• Financial reports are independently reviewed for completeness and accuracy.

Our evaluation of the internal controls over financial reporting has identified control deficiencies that are considered material weakness surrounding the preparation of financial statements and footnotes,
adjusting journal entries identified by the auditors, and an independent review of financial reports.

Management has not prepared financial statements that are in conformity with generally accepted accounting principles. In addition, material misstatements in the general ledger were identified during the
financial audit.

Required communications

Qualitative aspect of accounting practices

• Accounting policies: Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we have advised management about the appropriateness of accounting policies and their application. The significant accounting policies used by School are described in Note I to the financial statements. No new accounting policies were adopted and the application of existing accounting policies was not changed during the 2020 fiscal year. We noted no transactions entered into by the School during the year for which accounting policies are controversial or for which there is a lack of authoritative guidance or consensus or diversity in practice.
• Accounting estimates: Accounting estimates, including fair value estimates, are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements, the degree of subjectivity involved in their development and because of the possibility that future events affecting them may differ significantly from those expected. The following estimates are of most significance to the financial statements:

Estimate	Management's process to determine	Baker Tilly's conclusions regarding reasonableness
Depreciation	Evaluate estimated useful life of the asset and original acquisition value	Reasonable in relation to the financial statements as a whole

There have been no significant changes made by management to either the processes used to develop the particularly sensitive accounting estimates, or to the significant assumptions used to develop the estimates, noted above.

Financial statement disclosures: The disclosures in the financial statements are neutral, consistent and clear.

• Significant unusual transactions

There have been no significant transactions that are outside the normal course of business for the School or that otherwise appear to be unusual due to their timing, size or nature.

• Difficulties encountered during the audit

We encountered no significant difficulties in dealing with management and completing our audit.

• Disagreements with management

Professional standards define a disagreement with management as a matter, whether or not resolved to our satisfaction, concerning a financial accounting, reporting, or auditing matter that could be significant to the financial statements or the auditors' report. We are pleased to report that no such disagreements arose during the course of our audit.

• Management’s consultations with other accountants

In some cases, management may decide to consult with other accountants about auditing and accounting matters. Management informed us that, and to our knowledge, there were no consultations with other accountants regarding auditing or accounting matters.

• Written communications between management and Baker Tilly

The Appendix includes copies of other material written communications, including a copy of the management representation letter.

• Uncorrected misstatements and corrected misstatements

Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no misstatements identified.

• Compliance with laws and regulations

We did not identify any non-compliance with laws and regulations during our audit.

• Fraud

We did not identify any known or suspected fraud during our audit.

• Going concern

Pursuant to professional standards, we are required to communicate to you, when applicable, certain matters relating to our evaluation of the School’s ability to continue as a going concern for a reasonable
period of time but no less than 12 months from the date the financial statements are issued or available to be issued, including the effects on the financial statements and the adequacy of the related disclosures, and the effects on the auditor's report. No such matters or conditions have come to our attention during our engagement.

• Independence

We are not aware of any relationships between Baker Tilly and the School that, in our professional judgment, may reasonably be thought to bear on our independence.

• Related parties

We did not have any significant findings or issues arise during the audit in connection with the School’s related parties.

• Other audit findings or issues

We encountered no other audit findings or issues that require communication at this time.

We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the School’s auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention.

• Nonattest services

The following nonattest services were provided by Baker Tilly:

• Financial statement preparation
• Trial balance formatting form general ledger data

In addition, we prepared GASB No. 34 conversion entries which are summarized in the “Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position” and the “Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities” in the financial statements.

None of these nonattest services constitute an audit under generally accepted auditing standards, including Government Auditing Standards.
 

Accounting changes relevant to the School

Future accounting standards updates

GASB Statement Number	Description	Potentially Impacts to you	Effective Date
83	Certain Asset Retirement Obligations	Yes	12/31/20*
87	Leases	Yes	12/31/22*
89	Accounting for Interest Incurred before the End of Construction Period	Yes	12/31/21*
90	Majority Equity Interests and amendment of GASB Statements No.14 and No. 61	Yes	12/31/20*
92	Omnibus 2020	Yes	12/31/22*
93	Replacement of Interfund Bank Offered Rates	Yes	12/31/22*
94	Public-Private and Public Public-Public Partnerships and Availability Payment Arrangements	Yes	12/31/23*

Further information on upcoming GASB pronouncements
Preparing for the new lease standard

GASB’s new single model for lease accounting will be effective for the upcoming year. This standard will require governments to identify and evaluate contracts that convey control of the right to use another entity’s nonfinancial asset as specified in the contract for a period of time in an exchange or exchange like transaction. Contracts meeting the criteria for control, term and other items within the standard will result in recognizing a right to use asset and lease liability or a receivable and deferred inflow of resources.

We recommend the School review this standard and start planning now as to how this will affect your financial reporting. We recommend that you begin by completing an inventory of all contracts that might meet the definition of a lease. The contract listing should include key terms of the contracts such as:

• Description of contract
• Underlying asset
• Contract term
• Options for extensions and terminations
• Service components, if any
• Dollar amount of lease

In addition, School should begin to establish a lease policy to address the treatment of common lease types, including a dollar threshold for each lease. We are available to discuss this further and help you
develop an action plan.
Learn more about GASB 87.

Trending challenges for schools

Management and the governing body of the School must keep the future in mind as they evaluate strategies to achieve future growth. Keeping a balance between risk and sustainability is key, and
organizations need to think beyond their immediate needs to their long term goals. Economic uncertainty, coupled with key risk areas and fast paced technology change, make strategic planning complex. Begin the discussion with your management team to find your path to your future.

COVID-19 Risks and ongoing response

Staying nimble and resilient during unprecedented disruption COVID-19 has challenged all organizations and the effects continue to unfold. It is critical that management and governing bodies stay nimble to respond to direct and indirect effects of this disruption on operations, cash flow, and people. Some best practices to consider include:

• Establish mechanisms to track COVID-19 related expenses, lost revenues or delayed revenues 
• Monitor cash flow projections and seek short term liquidity help
• Create a policy and forms for compliance with Family First Coronavirus Response Act
• Compare anticipated results to bond covenants and track any continuing disclosure items
• Re-evaluate TIF projections with revised development scenarios
• Develop a strategy for leading your community through the crisis

Learn about public sector Coronavirus resources, including the latest news on business continuity and cash flow management, Federal stimulus and tax developments, and more.

Cybersecurity

Operational reporting on cybersecurity effectiveness 

As boards engage management in cybersecurity risk discussions, directors should expect management to produce reports on the effectiveness of the organization's cybersecurity-risk management program. Management can (and should) collect and analyze relevant performance measures and metrics to determine if cybersecurity safeguards and controls are operating as intended, and whether any corrective action should be taken to strengthen management's risk-mitigation approaches. While not an exhaustive list, some key processes on which management should report include these:

• Incident management
• Risk management and governance
• Independent assurance on the cybersecurity program

Learn more about cybersecurity risk management.

Data privacy

Elevating privacy risks to the forefront of board agendas

Organizations around the world are still scrambling to comply with the General Data Protection Regulation in the European Union, which went into effect in May 2018. While the data privacy regulatory
environment changes rapidly, organizations can take proactive steps to ensure that they stay informed of the existing regulations and of those developing on the near horizon.

Adequate oversight remains a key part of staying on top of data privacy developments. Some regulations specify oversight requirements, and can depend on the type of the organization, the quantity and type of personal data processed, and the locations where operations take place. In many cases, a data protection officer (DPO) must lead the effort. Since the DPO is responsible for overseeing practices related to data protection strategy and implementation, having one in place early on will help ensure that the privacy program is comprehensive and consistent. 

Learn more about data privacy risk management.

Client service team

Wendi Unger, CPA
Partner
777 East Wisconsin Ave 32nd Floor
Milwaukee, WI 53202
United States
T +1 (414) 777 5423
wendi.unger@bakertilly.com

Appendix B: Management representation letter

November 11, 2020

Baker Tilly US, LLP (formerly known as Baker Tilly Virchow Krause, LLP} 777 E. Wisconsin Avenue, Fl 32

Milwaukee, WI 53202

 

Dear Baker Tilly US, LLP:

We-are providing-this letter in connection with your audit of the financial statements of-f ocJ<-Un i versit     y High School, a charter school and component unit of the School District of Janesville, Wisconsin, as of June 30, 2020 and for the year then ended for the purpose of expressing opinions as to whether the financial statements present fairly, in all material respects, the respective financial position of the governmental activities and the general fund of Rock University High School and the respective changes in financial position, in conformity with accounting principles generally accepted in the United States of America. We confirm that we are responsible for the fair presentation of the previously mentioned financial statements in conformity with accounting principles generally accepted in the United States of America. We are also responsible for adopting sound accounting policies, establishing and maintaining internal control over financial reporting, and preventing and detecting fraud.

Certain representations in this letter are described as being limited to matters that are material. Items are considered material, regardless of size, if they involve an omission or misstatement of accounting information that, in the light of surrounding circumstances, makes it probable that the judgment of a reasonable person relying on the information would be changed or influenced by the omission or misstatement. An omission or misstatement that is monetarily small in amount could be considered material as a result of qualitative factors.

We confirm, to the best of our knowledge and belief, the following representations made to you during your audit.

Financial Statements

 We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter.

>The financial statements referred to above are fairly presented in conformity with accounting principles generally accepted in the United States of America. We have engaged you to advise us in fulfilling that responsibility. The financial statements include all properly classified funds of the primary government and all component units required by accounting principles generally accepted in the United States of America to be included in the financial reporting entity.

We acknowledge our responsibility for the design, implementation , and maintenance of internal control relevant to the preparationand fair presentation of financial statements that are free from material misstatements, whether due to fraud or error.

We acknowledge our responsibility for the design, implementation, and maintenance of internal control to prevent and detect fraud.

All events subsequent to the date of the financial statements and for which accounting principles generally accepted in the United States of America require adjustment or disclosure have been adjusted or disclosed. No other events, including instances of noncompliance, have occurred subsequent to the financial statement date and through the date of this letter that would require adjustment to or disclosure in the aforementioned financial statements.

All material transactions have been recorded in the accounting records and are reflected in the financial statements.

All known audit and bookkeeping adjustments have been included in our financial statements, and we are in agreement with those adjustments.

There are no known or possible litigation, claims, and assessments whose effects should be considered when preparing the financial statements. There are no unasserted claims or assessments that our lawyer has advised us are probable of assertion and must be disclosed in accordance with accounting principles generally accepted in the United States of America.

Guarantees, whether written or oral, under which the School is contingently liable, if any, have been properly recorded or disclosed.   Information Provided

We have provided you with:

• Access to all information, of which we are aware, that is relevant to the preparation and fair presentation of the financial statements, such as financial records and related data, documentation, and other matters.
• Additional information that you have requested from us for the purpose of the audit.
• Unrestricted access to persons within the entity from whom you determined it necessary to obtain audit evidence.
• Minutes of the meetings of the governance council or summaries of actions of recent meetings for which minutes have not yet been prepared.
• We have not completed an assessment of the risk that the financial statements may be materially misstated as a result of fraud.
• We have no knowledge of any fraud or suspected fraud that affects the entity and involves:
• Management,
• Employees who have significant roles in internal control, or
• Others where the fraud could have a material effect on the financial statements.
• We have no knowledge of any allegations of fraud or suspected fraud affecting the entity received in communications from employees, former employees, regulators, or others.
• We have no knowledge of known instances of noncompliance or suspected noncompliance with provisions of laws, regulations, contracts, or grant agreements, or abuse, whose effects should be considered when preparing financial statements.
• There are no known related parties or related party relationships and transactions of which we are aware.

Other

• There have been no communications from regulatory agencies concerning noncompliance with, or deficiencies in, financial reporting practices.
• We have a process to track the status of audit findings and recommendations.
• We have identified to you any previous financial audits, attestation engagements, and other studies related to the audit objectives and whether related recommendations have been implemented.
• The School has no plans or intentions that may materially affect the carrying value or classification of assets, liabilities, or equity.
• We are responsible for compliance-with federal, state, and local laws, regulations, and provisions of contracts and grant agreements applicable to us, including tax or debt limits, debt contracts, and IRS arbitrage regulations; and we have identified and disclosed to you all federal, state, and local laws, regulations and provisions of contracts and grant agreements that we believe have a direct and material effect on the determination of financial statement amounts or other financial data significant to the audit objectives, including legal and contractual provisions for reporting specific activities in separate funds.
• There are no:
• Violations or possible violations of budget ordinances, federal, state, and local laws or regulations (including those pertaining to adopting, approving and amending budgets), provisions of contracts and grant agreements, tax or debt limits, and any related debt covenants whose effects should be considered for disclosure in the financial statements or as a basis for recording a loss contingency, or for reporting on noncompliance, except those already disclosed in the financial statement, if any.
• Other liabilities or gain or loss contingencies that are required to be accrued or disclosed by accounting principles generally accepted in the United States of America.
• Nonspendable, restricted, committed, or assigned fund balances that were not properly authorized and approved.
• Rates being charged to customers other than the rates as authorized by the applicable authoritative body.
• Violations of restrictions placed on revenues as a result of bond resolution covenants·such as revenue distribution or debt service funding.
• In regards to the nonattest services performed by you listed below, we have 1) accepted all management responsibility; 2) designated an individual with suitable skill, knowledge, or experience to oversee the services; 3) evaluated the adequacy and results of the services performed, and 4) accepted responsibility for the results of the services.
• Financial statement prepanition
• Trial balance formatting from general ledger data
• None of these nonattest services constitute an audit under generally accepted including Government Auditing Standards.
• Rock University High School has satisfactory title to all owned assets, and there are no liens or encumbrances on such assets nor has any asset been pledged as collateral.
• Rock University High School has complied with all aspects of contractual agreements that would have a material effect on the fin,mcial statement in the event of noncompliance.
• The financial statements prop_erly classify all funds and activities.
• All funds that meet the quantitative criteria in GASB Statement No. 34 and No. 37 for presentation as- major are identified and presented as such and all other funds that are presented as major are particularly important to financial statement users.
• Components of net position (net investment in capital assets; restricted; and unrestricted) and components of fund balance (nonspendable, restricted, committed, assigned and unassigned) are properly classified and, if applicable, approved.
• Provisions for uncollectible receivables, if any, have been properly identified and recorded.
• Expenses have been appropriately classified in or allocated to functions and programs in the statement of activities, and allocations have been made on a reasonable basis.
• Revenues are appropriately classified in the statement of activities within program revenues and general revenues .
• lnterfund, internal, and intra-entity activity and balances have been appropriately classified and reported.
• Deposits and investments are properly classified, valued, and disclosed (including risk disclosures, collateralization agreements, valuation methods, and key inputs, as applicable).
• We have appropriately disclosed Rock University High School's policy regarding whether to first apply restricted or unrestricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position are available and have determined that net position were properly recognized under the policy. We have also disclosed our policy regarding which resources (that is, restrrcte-d, committed, assigned or unassrgned)-are considered to be spenHirst fo,expen-ditrrres for which more than one resource classification is available.

Sincerely,

• Rock University High School
• Signed: Mr. Steve Pophal, Superintendent
• Signed: Mr. Dan McCrea, Chief Financial Officer
• Signed: Ms. J amie

 

Appendix C: Two-way communication regarding your audit

As part of our audit of your financial statements, we are providing communications to you throughout the audit process. Auditing requirements provide for two-way communication and are important in assisting the auditor and you with more information relevant to the audit.

As this past audit is concluded, we use what we have learned to begin the planning process for next year’s audit. It is important that you understand the following points about the scope and timing of our
next audit:

• We address the significant risks of material misstatement, whether due to fraud or error, through our detailed audit procedures.
• We will obtain an understanding of the five components of internal control sufficient to assess the risk of material misstatement of the financial statements whether due to error or fraud, and to design the nature, timing, and extent of further audit procedures. We will obtain a sufficient understanding by performing risk assessment procedures to evaluate the design of controls relevant to an audit of financial statements and to determine whether they have been implemented. We will use such knowledge to:
  • Identify types of potential misstatements.
  • Consider factors that affect the risks of material misstatement.
  • Design tests of controls, when applicable, and substantive procedures.
• We will not express an opinion on the effectiveness of internal control over financial reporting or compliance with laws, regulations, and provisions of contracts or grant programs. For audits performed in accordance with Government Auditing Standards, our report will include a paragraph that states that the purpose of the report is solely to describe the scope of testing of internal control over financial reporting and compliance and the result of that testing and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance and that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering internal control over financial reporting and compliance. The paragraph will also state that the report is not suitable for any other purpose. 
• The concept of materiality recognizes that some matters, either individually or in the aggregate, are important for fair presentation of financial statements in conformity with generally accepted accounting principles while other matters are not important. In performing the audit, we are concerned with matters that, either individually or in the aggregate, could be material to the financial statements. Our responsibility is to plan and perform the audit to obtain reasonable assurance that material misstatements, whether caused by errors or fraud, are detected.

Our audit will be performed in accordance with auditing standards generally accepted in the United States of America and Government Auditing Standards.

We will not express an opinion on the effectiveness of internal control over financial reporting or compliance with laws, regulations, and provisions of contracts or grant programs. For audits done in
accordance with Government Auditing Standards, our report will include a paragraph that states that the purpose of the report is solely to describe (a) the scope of testing of internal control over financial
reporting and compliance and the result of that testing and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance, (b) the scope of testing internal control over compliance for major programs and major program compliance and the result of that testing and to provide an opinion on compliance but not to provide an opinion on the effectiveness of internal control
over compliance and, (c) that the report is an integral part of an audit performed in accordance with Government Auditing Standards in considering internal control over financial reporting and compliance in considering internal control over compliance and major program compliance. The paragraph will also state that the report is not suitable for any other purpose.

We are very interested in your views regarding certain matters. Those matters are listed here:

• We typically will communicate with your top level of management unless you tell us otherwise.
• We understand that the governing board has the responsibility to oversee the strategic direction of your organization, as well as the overall accountability of the entity. Management has the responsibility for achieving the objectives of the entity.
• We need to know your views about your organization’s objectives and strategies, and the related business risks that may result in material misstatements.
• We anticipate that the School will receive receive an unmodified opinion on its financial statements.
• Which matters do you consider warrant particular attention during the audit, and are there any areas where you request additional procedures to be undertaken?
• Have you had any significant communications with regulators or grantor agencies?
• Are there other matters that you believe are relevant to the audit of the financial statements? 

Also, is there anything that we need to know about the attitudes, awareness, and actions of the governing body concerning:

• The entity’s internal control and its importance in the entity, including how the governance council oversee the effectiveness of internal control?
• The detection or the possibility of fraud?

We also need to know if you have taken actions in response to developments in financial reporting, laws, accounting standards, governance practices, or other related matters, or in response to previous
communications with us.

With regard to the timing of our audit, here is some general information. If necessary, we may do preliminary financial audit work during the months of May and June. Our final financial fieldwork is
scheduled during the end of August to best coincide with your readiness and report deadlines. After fieldwork, we wrap up our financial audit procedures at our office and may issue drafts of our report for your review. Final copies of our report and other communications are issued after approval by your staff. This is typically 6-12 weeks after final fieldwork, but may vary depending on a number of factors.

Keep in mind that while this communication may assist us with planning the scope and timing of the audit, it does not change the auditor’s sole responsibility to determine the overall audit strategy and the audit plan, including the nature, timing, and extent of procedures necessary to obtain sufficient appropriate audit evidence.

We realize that you may have questions on what this all means, or wish to provide other feedback. We welcome the opportunity to hear from you.