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CURRENT AUDIT ISSUES Georgia Department of Audits

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CURRENT AUDIT ISSUES Georgia Department of Audits Powered By Docstoc
					     Claire Arnold, CPA
         Audit Manager
Education Audit Division
       May 12 & 13, 2009
Overview
 Engagement Process
 Engagement Timelines
 Issues Noted for FY 2008
 Risk Assessment/Internal Control Questionnaires
 Budgetary Basis Financial Statements
 Schedule of Expenditures of Federal Awards
 Additional Information
 Questions



             Department of Audits and Accounts
DOAA - Education Audit Division’s
Objectives
 To conduct work sufficient to render an opinion on the
  Higher Education component of the Consolidated Annual
  Financial Report (CAFR) encompassing the Financial
  Statements of the Board of Regents and its related units
  and the Statewide Single Audit.
 Conduct work sufficient to evaluate the budgetary
  Financial Statements of the Higher Education component
  of the Budgetary Compliance Report – “surplus”




                Department of Audits and Accounts
Engagement Process
 We will continue to conduct 3 types of engagements in
 an effort to meet the challenges of the CAFR.

   Audits
   Modified Disclosure Management Reports
   Agreed Upon Procedures Reports




              Department of Audits and Accounts
AUDITS
    We will be conducting audit engagements at following Institutions to provide adequate coverage for
    the Higher Education component of the Statewide Consolidated Annual Financial Report (CAFR)
    and accreditation purposes:


   Altamaha Technical College
   East Central Technical College
   Flint River Technical College
   Heart of Georgia Technical College
   Lanier Technical College
   Sandersville Technical College
   South Georgia Technical College



                           Department of Audits and Accounts
AUDITS
 Assess the risk of material misstatement by
  performing procedures that include: (1)
  information gathering procedures to ensure an
  adequate understanding of the industry, the entity
 and its environment including internal controls
 and (2) analytical procedures and test of detail
 transactions to understand the nature of account
 balances on the financial statements and to
 identify any anomalies or additional risk factors.

             Department of Audits and Accounts
AUDITS
 Once the risk of material misstatement is assessed, determine the
  extent of further procedures necessary. Where there is a heightened
  level of risk, additional procedures may be necessary to determine
  whether the financial statements are materially correct.
 Determine whether the Board of Regents together with its related
  units, taken as a whole, have complied in all material respects with
  state and federal laws, regulations, and provisions of contracts and
  grant agreements.
 Determine whether the Schedule of Expenditures of Federal Awards is
  fairly presented.
 Determine whether the program expenditures of each organization
  properly represents their actual expenditures compared to each
  organization’s annual budget.




                   Department of Audits and Accounts
MODIFIED DISCLOSURE MANGEMENT
REPORTS
 For Fiscal Year 2009, the following institutions will
 receive Modified Disclosure Management Reports:
   Albany Technical College
   Atlanta Technical College
   Dekalb Technical College
   Griffin Technical College
   Middle Georgia Technical College
   Moultrie Technical College
   Ogeechee Technical College
   Southeastern Technical College
   Swainsboro Technical College
   Valdosta Technical College
   TCSG Central Office



                     Department of Audits and Accounts
MODIFIED DISCLOSURE
MANGEMENT REPORTS
 The Management Report contains selected financial
  statement information pertinent to the financial and
  compliance activities of the individual entity.
 The Management Report is for reaccreditation and merger
  purposes.
 Auditors verify that documentation supports the financial
  statements.
 Additional testing is conducted in order to express an
  opinion on the Higher Education component of the CAFR
  and Statewide Single Audit.
       Budgetary Compliance Testing

                  Department of Audits and Accounts
AGREED UPON PROCEDURES REPORTS


 The remaining Institutions will be receiving an Agreed
 Upon Procedures Engagement.




             Department of Audits and Accounts
AGREED UPON PROCEDURES REPORTS
These Agreed Upon Procedures Engagements will include the following procedures:

 Review of Balance Sheet Items reported on the AFR – Confirm that they are adequately
  documented and properly reconciled to the Institution’s general ledger.
 Review the Institution’s Statement of Net Assets, Statement of Revenues, Expenses and
  Changes in Net Assets, and Statement of Cash Flows to ensure that the financial
  statements properly reflect the activity within the accounting records.
 Review the Institution’s Notes to the Financial Statements for accuracy and
  completeness.
 Review the Institution’s year-end GAAP basis journal entries to determine if the entries
  were accurately and appropriately documented.
 Confirm State Appropriations revenues, State Appropriations receivables and the
  remittance of PY surplus.
 Review the listing of Accounts Receivable Write-Offs during the year for appropriate due
  diligence and SAO approval.
 Verify that the listing of salaries, travel and per diem and fees reported to DOAA was in
  compliance with O.C.G.A. 50-6-27 and has been reconciled to the accounting records.
 Review the year end Budget Basis Financial Statements including the Budget Comparison
  and Surplus Analysis Report s for accuracy and to determine if any budgetary over
  expenditures exist.



                       Department of Audits and Accounts
AGREED UPON PROCEDURES REPORTS
 Review Budget Basis Reserves to determine that they are properly documented, valid and
  appropriate.
 Confirm that information reported to the Georgia Student Finance Commission has been
  reconciled with the H.O.P.E. Scholarship activity on the Institution’s financial records.
 Review the Schedule of Expenditures of Federal Awards. Confirm that the information
  presented in the schedule supports the activity reported within the Institution’s
  accounting records
 Review capital assets records to ensure that (1) an annual physical inventory is being
  conducted, (2) issues noted during physical inventory are evaluated and capital assets
  records are properly adjusted, and (3) capitalization thresholds are being followed.
 Bank reconciliations are being performed and all reconciling items are being addressed
  in a timely manner.




                        Department of Audits and Accounts
AGREED UPON PROCEDURES
ENGAGEMENTS

 Additionally, the auditors will be reviewing the
 accuracy of the GSFIC Gift activity recorded on the
 Institution’s AFR for CAFR coverage and following up
 on both financial and federal audit findings from FY
 2009.




             Department of Audits and Accounts
Engagement Process
SAS 103
 Exit Conference – Closure Letter Process will be
  explained, Representation Letter, Summary of
  Corrected and Uncorrected Misstatements and
  copies of draft findings
 Closure Letter Package – Draft Report including
  findings, Closure Letter, CAP Instructions (Sent
  via E-mail)
 Response Requested within 5 business days
 Second Request will be made on 6th business day
 After 10 Business Days – TCSG (Lisa Eason) will be
  contacted.
              Department of Audits and Accounts
ENGAGEMENT TIMELINES
                                      Planning and Internal
                                       Control Testing on Audits
                                       should begin probably in
                                       July and August.
                                      For audit engagements,
                                       financial work will have to
                                       start in July or early
                                       August.
                                      Fieldwork for all
                                       college/university CAFR
                                       coverage engagements for
                                       Fiscal Year 2009 must be
                                       finished by October

      Department of Audits and Accounts
ENGAGEMENT TIMELINES
Specific engagement completion
   deadlines:
AUDITS
Altamaha – 10/30
                                                  FDMR
East Georgia - 9/25                               Atlanta – 10/23
Flint River - 9/17                                Griffin – 10/10
Heart of Georgia - 10/2                           Southeastern – 10/30
Lanier – 10/1                                     Swainsboro – 10/15
Sandersville – 10/8
                                                  Valdosta – 10/15
South Georgia - 9/20
                                                  TCSG Central Office – 10/30

                                                  Albany, Dekalb, Middle Ga, Moultrie,
                                                    and Ogeechee



                   Department of Audits and Accounts
Issues Noted during FY 2008
 Cut Off
 Capital Lease/Operating Lease Determinations
 Compensated Absences
 SEFA
 Capital Assets
 Risk Assessment Documentation including monitoring
 Financial Statement Review Process
 Access Controls



                   Department of Audits and Accounts
Preparing for the Auditors
 Auditor Request List
 Risk Assessment Questionnaire
 Internal Control Documentation including
 monitoring process




              Department of Audits and Accounts
Department of Audits Resource Page
            www.audits.state.ga.us




     Department of Audits and Accounts
Resource Page Items:
•Today’s Presentation
•Auditor Request List
•Risk Assessment Questionnaires
•UpdatedQueryInformation(6/01/09)
Budget Basis Financial
Statements
Three Budget Basis Financial Statements
     Balance Sheet – Budget Fund
     Summary Budget Comparison and Surplus
      Analysis Report
     Statement of Program Revenues and Expenditures
      by Funding Source Compared to Budget

   Ensure that Budget Basis Statements are supported
   by financial records.

             Department of Audits and Accounts         21
CHECK POINTS




Department of Audits and Accounts   22
Balance Sheet – Budget Fund
 Assets = Liabilities + Fund Balance
 Total Fund Balance reported on the Balance Sheet
  agrees with Fund Balance totals on the Budget
  Comparison Schedules (By Total and Category)
 Balance Sheet Items appear reasonable
 Differences between Budget Basis Balance Sheet and
  GAAP Statement of Net Assets appear reasonable




               Department of Audits and Accounts       23
Summary Budget Comparison
and Surplus Analysis Report
 State Appropriations equals total FY 2009 Allotment
 Carry Over from Prior Year Amount = Prior Year
  Expendable Reserved Fund Balances
 Budget Column agrees with final approved budget
 Actual Figures Column is supported by Budgetary
  Basis Financial Statement Worksheets
 Unfavorable Expenditure Variances by OPB Program
  have been reviewed to determine if they are truly a
  budgetary over expenditure

              Department of Audits and Accounts         24
Summary Budget Comparison
and Surplus Analysis Report
 Current Year Budgets include expenditures for GSFIC
  campus managed projects
 Remittance of Prior Year Surplus Amount to BOR Central
  Office agrees with PY report
 Adjustment Items follow traditional format or deviation is
  legitimate - Prior Year Payable/Expenditure Adjustments
  (Increase Fund Balance) and Prior Year
  Receivables/Revenues (Decrease Fund Balance)
 Carry Over from Prior Year Amount = Prior Year
  Expendable Reserved Fund Balances

                Department of Audits and Accounts              25
Summary Budget Comparison
and Surplus Analysis Report
 Fund Balance – July 1 agrees with Prior Year Statements
 Fund Balance – July 1 Unreserved should equal prior year
  surplus
 Reserves for Departmental Sales, Indirect Cost Recoveries,
  Technology Fees, Restricted, LiveWorks and Prior Year
  Carry-Over should agree with the appropriate ledger fund
  information




                Department of Audits and Accounts              26
Program Revenues and Expenditures by Funding Source
Compared to Budget
 Original Budget Column should agree with Original
  Budget
 Final Budget Column should agree with Final Approved
  Budget and Totals by Program should agree with the
  Summary Budget Comparison Schedule
 Current Year Revenues Total should agree with Total
  Revenue reported on the Summary Budget Comparison
  Schedule
 Prior Year Carry-Over Column total should agree with Prior
  Year Carry-Over amount reported on the Summary Budget
       Comparison
               Department of Audits and Accounts           27
Program Revenues and Expenditures by Funding Source
Compared to Budget
 Total Funds Available should agree with Total Funds
  Available on the Summary Budget Comparison Schedule
 CY Actual Expenditures should agree with amounts
  reported on the Summary Budget Comparison Schedule by
  Program and Total
 Total Variance Columns for Funds Available and
  Expenditures should agree with the Summary Budget
  Comparison Schedule
 Total Prior Period Adjustments Column should equal the
  net of the Prior Year Payables/Expenditures and Prior Year
       Receivables/Revenues amounts reported on the
       Summary Budget Comparison Schedule
               Department of Audits and Accounts               28
Program Revenues and Expenditures by Funding Source
Compared to Budget
 Other Adjustments Total should agree with the changes in
    Non-expendable Fund Balance Reserves from PY to CY
   Transfer Column amounts should agree with funds
    transferred between OPB programs to cover budgetary over
    expenditures
   Total Reserves Column should agree with expendable Fund
    Balance Reserves at 6/30 as reported on the other two
    budgetary schedules
   Surplus Total should agree with CY Surplus
   Total Fund Balance Column should equal total fund
         balance at 6/30
                 Department of Audits and Accounts           29
SEFA
 Web application for Schedule of Expenditures of
  Federal Awards for FY 2009 is the same as last year
 Application includes roll forward capability
 Application working space for adjustments
 SAO will send SEFA instructions
SEFA PROCESS
 Entity will prepare information for the Schedule of
  Expenditures of Federal Awards
 Entity will access the SEFA application
 Entity will upload file or roll forward SEFA
  information
 Entity will utilize application work space to ensure that
  data is accurate
 Entity will adjust and ensure that all errors identified
  by the application have been corrected
SEFA PROCESS
 Entity will finalize information and submit to SAO
 SAO will review data and submit to DOAA for audit
  purposes
 DOAA will review as part of audit procedures and
  ensure accuracy of data submitted
 DOAA will propose audit adjustments if deemed
  necessary and discuss adjustments with the entity
 DOAA will finalize review of the entity’s SEFA
 Entity will receive an email from the SEFA application
  to approve or deny any auditor adjustments
SEFA PROCESS
 Entity will access the SEFA application and
  confirm/deny audit adjustments
 SAO will receive entity confirmation and finalize
  consolidating data for the Statewide Single Audit
SCHEDULE OF EXPENDITURES OF FEDERAL
AWARDS
Pass – Through Activity must be
  identified

 From Within the Reporting Entity
             or
 Outside of the Reporting Entity
SEFA Issues Noted During FY 2008
 Non-Monetary amounts require a completed loan activity
  section
 FSEOG and College Work Study are direct grants not pass
  through GDOE
 SEFA amounts should include indirect cost recovery
 SEFA expenditures are reported on a GAAP basis




               Department of Audits and Accounts            41
Department of Audits and Accounts   43
CONTINUOUS AUDIT INFORMATION
 Salary, Travel and Professional Services will be
  submitted through the same process for FY 2009
 Due Date will be August 14
 The web application will open for submissions starting
  July 9
 For Fiscal Year 2009, SB 300 Data will be collected
Other Items
 Confidentiality Agreement included with Engagement
  Letter
 GASB 49 and 52
 Tracking of Federal Stimulus Funds
 Technical College Mergers
          Contact Information:
                 Claire Arnold
Phone Number: (404) 651-8818
email: arnoldcm@audits.ga.gov

				
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