In New York State, charter schools are defined as “independent and autonomous public schools”and are authorized by the New York Charter Schools Act of 1998 (Article 56 of the New York State Education Law). New York State charter schools are legally organized as not-for-profit education corporations to the terms of a contractual agreement, or charter, between the school and the chartering entity which approved the school’s application for a charter. Charter schools are non-sectarian, tuition-free, open to all students residing in the State, governed by the school’s own self-selecting board of trustees, and independent of existing school districts.
The Charter Schools Act authorizes several entities as “chartering entities” or “authorizers” that can receive and approve applications for charters and then conduct oversight and evaluation of the charter schools that the entity has approved. Prior to 2010, the Act authorized the Board of Regents and the Board of Trustees of the State University of New York as statewide chartering entities and all local boards of education as chartering entities for their respective school districts. Amendments to the Act in 2010 removed the authority of local boards of education to approve applications for new charters although those boards remain the chartering entities for any charter schools they had previously authorized (only the New York City Chancellor, on behalf of the New York City Department of Education and the Buffalo Board of Education have exercised the option to approve charter schools in their districts). All applications for new charters must now be submitted to either the Board of Regents or the SUNY Board of Trustees. In addition, local boards of education continue to have the authority to approve applications for the conversion of existing public schools to charter schools within their respective school districts.
About the Guide
The Charter Schools Act requires that a charter school be subject to the financial audits, the audit procedures, and the audit requirements described in its charter. The procedures and standards must be applied consistent with Generally Accepted Auditing Standards (GAAS) and Generally Accepted Government Auditing Standards (GAGAS). Independent audits of financial statements are required at least once annually. The audits are required to be comparable in scope to those required of other public schools, keeping in mind that charter schools are required to follow the accounting standards set by the Financial Accounting Standards Board (FASB) and school districts are required to follow the accounting standards set by the Government Accounting Standards Board (GASB).
The Audit Guide was developed to provide assistance to auditors of charter schools authorized by the Board of Regents as well as for any charter school receiving federal Charter Schools Program funds through the Department. The guidance is focused on helping auditors understand the differences between charter schools and other non-profit entities, as well as providing specific guidance to auditors and charter school management about the form and content of reports and testing required by the Department and State education law for Regents-authorized charter schools. Other charter entities are encouraged to adopt the guide as they see fit.
Charter school administrators are encouraged to read the guide in order to understand the areas their independent auditor will be focusing on in addition to routine financial matters.