Financial Statement Checking Procedures

Transfer Payment and Financial Reporting BranchMinistry of Education2006-07 Financial Statement Checking ProceduresTPFR Information SessionsFall 2007Transfer Payment and Financial Reporting BranchMinistry of Education2ObjectiveThe purpose of the Checking Proceduresis to assess if boards have met the key compliance areas of the funding model and to determine the board's final grant entitlement for year under review.The review and analysis of the board’s submitted data also ensures consistency and data integrity for future funding models or enhancements.Transfer Payment and Financial Reporting BranchMinistry of Education3Topics of DiscussionInitial ReviewPublished Financial StatementsFinancial HealthSchedulesSectionsData FormsAppendicesTransfer Payment and Financial Reporting BranchMinistry of Education4Initial ReviewFinancial Statements Accuracy -Review EFIS submission; compare the EFIS submission to the published audited statements and the hard copies received.Prior Year Review -Review the previous years checking procedures to identify problematic recurring issues.Warning Messages -Note for further investigation during review.Data Analysis and Review -Note questionable variances for further review.Appendix H -Compare the boards staffing levels to the prior year Financial Statements.Transfer Payment and Financial Reporting BranchMinistry of Education5Published Financial StatementsEnsure auditor's reportconforms to one of the recommended formats provided to school boards.Check that all required Notes to the Financial Statementsare disclosed per the PSA Handbook.Verify if the board included a signed Management Reportas part of their published financial statements or that the management statement is included in the notes to the financial statements.Note the entities the board is consolidating.Check the board's website to verify that they have published the Director's Annual Report.Transfer Payment and Financial Reporting BranchMinistry of Education6Financial HealthSubmission –Determineif board has incurred an operating deficit. (Section 231 of the Education Act) Financial Position -Note changes in net financial assets.Amount recovered -Note what is reported in Appendix I and if the board's future cash funding requirements are increasing or decreasing.Cash Flow –Determine if change in cash and cash equivalents is improving .Transfer Payment and Financial Reporting BranchMinistry of Education7SchedulesEnsure Budget columns are completed on all schedules.Schedule 2.2 –Capital fundOther Revenues should include proceeds from sales of sites and buildings recognized in current year. Amount reported should not differ significantly from Schedule 5.1 Lines 1.10, 1.11, 1.12, 1.14, 1.15, 1.16. Schedule 2.4 –School Activities FundReview for completeness and reasonability.Schedule 3 –Capital FundEstablish whether capital dollars are being used for operating purposesTransfer Payment and Financial Reporting BranchMinistry of Education8Schedules Schedule 4 –Outlay for Duties of a Municipal CouncilCompare to previous year and ensure schedule is completed if applicable.Schedule 5 –Reserve FundsOpening balances should agree to last year closingSchedule 6 -Trust FundsCompare to previous year total balances and ensure schedule is completed if applicable.Schedules 9 & 10 –Operating Fund Revenues/ExpendituresCompare revenues/expenditures reported with prior year for reasonableness.Transfer Payment and Financial Reporting BranchMinistry of Education9Schedules Schedule 10ADJ –Adjustments for ComplianceThis schedule is designed to show the adjustments required to arrive at Adjusted Expenditures for compliance purposes. Compare the column totals to notes to the financials statements, Schedule 10G etc. Verify if amounts reported are accurate.Schedule 10A & 10B -Special Education ExpendituresEnsure expensesare not reported on a PSAB basis. i.e. interest accrual, vacation accrual, retirement benefits and prepaid expenses to be excluded.Review the classroom teacher salaries and benefits on Schedule 10 and Schedules 10A/B. Follow up with the board if the ratio of benefits to salary allocated on Schedules 10A/B for Special Education exceeds the ratio of benefits to salary on Schedule 10. Transfer Payment and Financial Reporting BranchMinistry of Education10Schedules Schedule 11A & 11B –Tax RevenueEnsure that the tax revenues reported are reasonable. Review supplementary taxes and write-offs.Schedule 12 –Continuing Ed, Summer school & PLARAnalyze program changes Schedule 13 –Day School EnrolmentCompare enrolment with confirmation letter. Compare independent study enrolment with prior year. Noteif "other pupils" are reported then ensure Appendix B1 is completed and agrees.Transfer Payment and Financial Reporting BranchMinistry of Education11SectionsSection 1 –Summary of allocationsCompare allocation with prior year and current year Revised Estimates.Section 2 –Special EducationCompare SEA claims, SIP, and Section 23 amounts with approved files.Section 3 –Language AllocationsFRENCH BOARDS ONLY –Verify if amount entered at line 3.10 Start Up.Transfer Payment and Financial Reporting BranchMinistry of Education12SectionsSection 7 & Appendix G -Teacher Qualification and Experience & Salary GridThe placement of teachers in Section 7 when multiplied by the salaries reported on Appendix G should not be greater than the applicable salaries and wages reported on Schedule 10.Ensure that Appendix G reflects the most current year grid.Section 10 –Administration & GovernanceThe number of trustees reported should be similar to last year.The number of municipalities reported are compared to Schedule 11A excluding any unorganized or isolate areas.Transfer Payment and Financial Reporting BranchMinistry of Education13SectionsSection 11 –Pupil Accommodation -Section 23 Program –Line 11.12.2 -Compare the FTE reported at line 11.12.2 to the Field Service Branch approval file. The acquisition cost of portables reported at lines11.31.8 and 11.34.8 are compared to the amounts reported on the 5 and 7 month capital activity reports.Section 12 –Debt chargesVerify the opening balances; retirement of sinking fund amount, principal payments, interest payments, contribution to sinking fund, eligible NPF debt related to NPP.Section 14 -Territorial District AdjustmentsOnly applicable to tax collecting boards in unorganized areasTransfer Payment and Financial Reporting BranchMinistry of Education14Data FormsData A2 –Enveloping, Special EducationSelf Contained Classroom Enrolment -Compare the number reported to the previous year for reasonableness. Verify strike or lock-out, special education expenditure for High Cost Programs and other revenue sources.Data A2 -Enveloping, Administration and Governance Other Revenue Sources -Check any amounts identified here against Schedule 9 for reasonableness.Transfer Payment and Financial Reporting BranchMinistry of Education15Data Forms Data A3 –Revenue RecognitionVerify opening balance, transfer from proceeds of disposition reserve and transfer from deferred revenues.Data D –Net ExpenditureVerify that 68.49% of tuition fee revenue has been allocated to the classroom.Values at line 29 col. 8 indicate change in purpose of reserve which should have supporting ministry approval. Check transfers from pupil accommodation reserve, transfers from deferred revenue, flexibility amount.Transfer Payment and Financial Reporting BranchMinistry of Education16AppendicesAppendices D1 Education Development Charges & D2 –EDC Eligible Capital & Debt ObligationsEnsure that the opening fund balance and amount reported as outstanding principal are correct.Appendix F –Transportation to Provincial SchoolsReview expenditure, number of pupils and average cost trends. Appendix I -Amounts to be Recovered: Check figures to information in board's notes to the financial statements .Transfer Payment and Financial Reporting BranchMinistry of Education17Questions