2017 BSA Audit Tool Kit

Transcription

1 2017 BSA Audit Tool Kit Includes Local Council Audit Self-Review Form Note: This is not intended to be a stand-alone document and should not be relied upon without first reading the Local Council Guide to the 2017 Audit (the Guide). For those councils adopting early the provisions of FASB ASU , Presentation of Financial Statements of Not-for-Profit Entities, refer to Appendix C of the Guide.

2 REQUIRED FINANCIAL STATEMENTS The Statement of Financial Position (FINPOS_S), Statement of Activities and Changes in Net Assets (ACNA-MAN), Statement of Cash Flows (SOCF), and Statement of Functional Expenses print both Excel sheets (FUNCTEXP) must be presented in three-fund format, including a total of all funds column. All required reports should be comparative, preferably by fund, although a comparative totals column will be accepted. FORMATTING REQUIREMENTS Friends of Scouting Contribution Revenue FOS (and other) contribution revenue should be presented as a single line item (net of any provision calculated by the fundraising system) on the face of the Statement of Activities and Changes in Net Assets (ACNA-MAN). Because local councils record contributions expected to be received within a year at net realizable value, no mention should be made of a provision for uncollectible accounts, either on the face of the financial statements or in the notes. Interfund Loans Interfund loan entries must be recorded on the same line in the assets section of the Statement of Financial Position (FINPOS_S) and must total zero in the total of all funds column. Interfund loans expected to be outstanding for more than one year should be presented in the noncurrent assets section of the Statement of Financial Position (FINPOS_S). See special requirements regarding interfund loans classified as current under Negative Cash, below. Interfund loans shown in both asset and liability sections of this report in your audit are noncompliant for both BSA and GAAP purposes. Negative Cash If, at year-end, your council has a negative cash balance in any fund (but a positive overall cash balance), the negative balance must be reclassified to a noncurrent interfund loan account and evaluated for presentation as current or noncurrent (i.e., debit cash, credit interfund loan). If the council classifies an interfund payable as current, it must possess both the ability and intent to settle the liability within one year of the balance sheet date. If total cash is negative at year-end, the negative balance(s) should be reclassified to a current liability account and listed as Bank overdraft (or similar) on your audited financial statements. Investment Income Investment income from all funds, if not subject to donor or other restrictions, should be credited as earned to the appropriate revenue account of the operating fund (see pages of the Local Council Guide to the 2017 Audit for more information). Transfers and Prior Period Adjustments Shown on the Statement of Activities and Changes in Net Assets (ACNA-MAN). Ensure that interfund transfers and adjustments appear between net assets, beginning of year and net assets, end of year. See example below: Net assets, beginning of year $10,000 Adjustments to net assets $2,000 Transfers $1,000 Net assets, end of year $13,000 Special Events Cost of Direct Benefits* Special events gross $25,000 Less cost of direct benefits ($5,000) Special events net $20,000 2 January 2018

3 FORMATTING REQUIREMENTS (continued) Sale of Supplies and Cost of Goods Sold* Shown on the Statement of Activities and Changes in Net Assets (ACNA-MAN). Sale of supplies revenue must show gross sales and include information about cost of goods sold. If the BSA Supply Group operates your Scout shop, the rent check should be recorded to other revenue using account number xxx-90. There are two acceptable formatting standards. See examples below: Sample A Sales of supplies gross $15,000 Less cost of goods sold ($2,000) Net sales of supplies $13,000 Sample B Sale of supplies (less cost of goods sold of $2,000) $13,000 Note: In this example, the specific amount of cost of goods sold ($2,000) must be shown. Product Sales* Shown on the Statement of Activities and Changes in Net Assets (ACNA-MAN). Product sales revenue must show gross sales and include information about cost of goods sold and commissions paid, even if the council did not write commission checks to the units. Product sales gross $15,000 Less cost of goods sold ($2,000) Less commissions paid to units ($1,000) Net Product sales $12,000 *At a minimum, the BSA will accept a parenthetical presentation of these items displayed on the face of the Statement of Activities and Changes in Net Assets (ACNA-MAN), e.g., Product sales (net of cost of goods sold of $X,XXX and commissions paid to units of $X,XXX) $X,XXX. Statement of Cash Flows (SOCF) When cash is received with a donor-imposed restriction that limits its use to long-term purposes, it should be shown as a cash inflow from financing activities and as an adjustment to reduce cash flows from operating activities. NOTES SECTION Notes to the Financial Statements There must be a notes section included behind the four required statements. Nature of Organization Specific language required in this section includes: service to young men ages 7 21 and young women ages in XX counties of (your state), and the BSA Mission Statement. Inventory Valuation If the council uses SellWise**, then inventory is valued using average cost. If your council uses hand receipts, inventory is most likely valued using the first in, first out method. **If some other point-of-sale software is being used, check with the software vendor to validate the valuation method. 3 January 2018

4 NOTES SECTION (continued) Temporarily Restricted Contributions Auditors should copy the language directly from the Local Council Guide to the 2017 Audit in the donor restrictions section on page 26. Although temporarily restricted contributions typically are reported as support that increases temporarily restricted net assets, per FASB ASC , they may be reported as unrestricted support if the restrictions are met in the same reporting period, the policy is followed consistently, and the policy is disclosed. Retirement Plan Specific language is included in the Local Council Guide to the 2017 Audit. The plan name is Boy Scouts of America Master Pension Trust Boy Scouts of America Retirement Plan for Employees. Eligible employees contribute 2 percent of compensation and the council contributes an additional 7 percent to the plan. Pension expense for the years ending December 31, 2017 and 2016, was $XX,XXX and $XX,XXX, respectively. Investment Expenses Investment information in the notes section must list the fees paid, e.g., Investment expenses paid by the council in 2017 and 2016 were $X,XXX and $X,XXX, respectively. Tabular presentation of investment expenses is also acceptable. Investment Spending Policy (if applicable) The auditor should include a short definition of the council s investment spending policy, if the council has adopted a policy. Fair Value Measurement Please see the Local Council Guide to the 2017 Audit for sample notes. Uncertainty in Income Taxes Please see the Local Council Guide to the 2017 Audit for sample notes. UPMIFA Please see the Local Council Guide to the 2017 Audit for sample notes. Federal Income Tax Status Almost all local council audited financial statements correctly state that the council is exempt from income taxes under Section 501(c)(3) of the Internal Revenue Code... The key is to add: whereby only unrelated business income, as defined by Section 509(a)(1) of the Code is subject to federal income tax. The Council currently has no unrelated business taxable income (or list amount of UBIT). Accordingly, no provision (or a provision) for income taxes (in the amount of) has been recorded. Donated Services Disclosure See page B-12 of the Local Council Guide to the 2017 Audit for a discussion of donated services. For most councils, the following donated services disclosure footnote would be appropriate: Donated services that do not either require specialized skills or enhance nonfinancial assets are not recorded in the accompanying consolidated financial statements because no objective basis is available to measure the value of such services. A substantial number of volunteers have donated significant amounts of their time to the Organization s program services and its fundraising campaigns, the value of which is not recorded in the accompanying consolidated financial statements. 4 January 2018

5 NOTES SECTION (continued) Audit Committee Meeting Minutes Minutes of the audit committee meeting(s) must be taken. The minutes must list those in attendance, those absent, and actions taken, and have the signatures of the audit committee chair and Scout executive. Minutes should also include an acknowledgment of any BSA deficiencies noted in your 2017 audited financial statements and steps taken in the current year to correct them. NET ASSETS BY FUND AND RESTRICTION Once the audit adjustments, if any, are entered in the system, statements should be printed and compared to the audited statements. Net assets MUST match by fund, by restriction, and in total. If they do not, then the auditor should be contacted and the issue resolved. As you look at your audit, if the net assets do not match by fund and restriction, then it is important that you go back to your auditor and get additional audit adjustments to bring your statements in line with the audited statements. It is NOT enough to have totals that match; balances must also match by restriction. NOTE: We recommend that the audit adjustments be given to your accounting specialist at the same time that the draft audit is delivered to the council. Audit adjustments are entered at that time. If the draft audit needs changes before the final product is produced, then additional audit adjustments are given with the bound audit. 5 January 2018

6 Net Assets: Council-transmitted net assets match audited net assets by fund and restriction Example of Non Compliance: Council transmitted net assets do not match by fund and/or restriction In the example below, council-transmitted net assets do NOT match audited net assets by fund and restriction Local Council Audit Self Review Instructions 6 January 2018

7 The Local Council Audit Self-Review Form is a tool designed to help councils understand and evaluate the audit and BSA standards prior to the submission of the audit and required accompanying documents. Please submit prior to July 31, 2018 to audits.990@scouting.org 1. Make sure the audit adjustments proposed by the auditors and accepted by the audit committee have been recorded in PeopleSoft and posted to the general ledger. 2. Obtain a draft copy of the 2017 audited financial statements. 3. Generate the following financial reports for the period ending December 31, 2017: Statement of Financial Position (FINPOS_S) Statement of Activities and Changes in Net Assets (ACNA-MAN) Statement of Functional Expenses print both Excel sheets (FUNCTEXP) Statement of Cash Flows (SOCF) 4. Compare the financial reports to the audited financial statements, ensuring that net assets match by fund, by restriction, and in total. 5. Using the BSA Audit Tool Kit as a resource document, complete the Local Council Audit Self-Review Form starting on page 8 of this document. 6. Check the boxes on the Local Council Audit Self-Review Form if the standards are met. 7. If the draft audited financial statements do not meet BSA audit standards, this is the time to go back to your auditors and work together to correct the deficiencies. 8. If corrections are made, obtain another draft copy of the audit financials and repeat steps 1 through 7. 7 January 2018

8 Local Council Audit Self-Review Form Year ended: 2017 Reviewed by Classification of audit opinion: Unmodified Modified Other REQUIRED FINANCIAL STATEMENTS Are they in the three-fund format (operating, capital, and endowment) and do they contain prior-year information? Statement of Financial Position (FINPOS_S) Statement of Activities and Changes in Net Assets (ACNA-MAN) Statement of Functional Expenses (FUNCTEXP) Statement of Cash Flows (SOCF) Three-Fund Format N/A Prior-Year Comparison FOS CONTRIBUTIONS: FOS contributions are shown as one-line item in the Statement of Activities and Changes in Net Assets (ACNA-MAN), with no provision for uncollectible accounts disclosed. INTERFUND LOANS: Interfund loans are recorded in the asset section only, and the total of all funds net to zero on the Statement of Financial Position (FINPOS_S). Interfund loans not expected to be settled within one year should be presented in the audited Statement of Financial Position (FINPOS_S) in the noncurrent assets section. INVESTMENT INCOME: Investment income from the endowment fund is recorded in the fund for which its use is intended (in most cases, this is the income generated from the investments of the endowment fund and earned, less expenses, in the current year recorded as investment income in Fund 1) and the amount is in accordance with the council s spending policy, if earned. TRANSFERS: There are no transfers, or they are recorded between net assets beginning of year and end of year on the Statement of Activities and Changes in Net Assets (ACNA-MAN). COST OF GOODS SOLD: If applicable, cost of goods sold is disclosed on the Statement of Activities and Changes in Net Assets (ACNA-MAN). PRODUCT SALE COST OF GOODS SOLD: This is disclosed on the Statement of Activities and Changes in Net Assets (ACNA-MAN). PRODUCT SALE COMMISSIONS PAID: This is disclosed on the Statement of Activities and Changes in Net Assets (ACNA-MAN). SPECIAL EVENT DIRECT COST OF BENEFITS: This is disclosed on the Statement of Activities and Changes in Net Assets (ACNA-MAN). AUDIT COMMITTEE MINUTES: Minutes are taken, typed, and filed locally with the two required signatures (Scout executive and audit committee chair). Steps are taken to correct prior-year BSA deficiencies, if any. AU-C 260 (formerly SAS 114/115 Management Letter): Submitted. MANAGEMENT RESPONSE LETTER STATEMENT OF CASH FLOWS (SOCF): Cash received with a donor-imposed restriction that limits its use to long-term purposes should be shown as a cash inflow from financing activities and as an adjustment to reduce cash flows from operating activities. 8 January 2018

9 NOTES INCLUDED WITH AUDIT Notes on operations disclosure is met. Inventory valuation disclosure is met. Council uses SellWise (the averaged method is used to calculate the valuation). Council has national Scout shop. Council uses other (hand receipts or other point-of-sale software). Temporarily restricted contributions reported as unrestricted if restriction is met in same year. Donated services are recorded if the services create or enhance nonfinancial assets or require specialized skills and are performed by people with those skills, and otherwise would be purchased by the council. Investment expenses (management/trustee fees) are disclosed. Federal income tax status includes unrelated business income statement. Spending policy disclosure contains a short definition of the basis for the calculations of the amount of the spending policy for the current year. Spending policy percentage: If council does not have a board-approved spending policy, is the amount of the draw from endowment explained? Y N Retirement plan is described as the employee contribution is 2 percent and the employer contribution is 7 percent. ASC Fair Value Measures defines the use of fair value measurements. ASC Endowments/UPMIFA disclosure is included. ASC Uncertainty in Income Taxes disclosure is included. Net assets by fund and restriction within each fund match the council-generated Statement of Financial Position (FINPOS_S). 9 January 2018

10 Audited Statement of Activities and Changes in Net Assets Surplus or deficit Total revenue and support Total expenses System-Generated Statement of Activities and Changes in Net Assets Surplus or deficit Total revenue and support Total expenses Council Statement of Financial Position (FINPOS_S) NET ASSETS Fund 1 Values Fund 2 Values Fund 3 Values Unrestricted Net Assets Unrestricted Net Assets Unrestricted Net Assets Temp Rest. Net Assets Temp Rest. Net Assets Temp Rest. Net Assets Perm Rest. Net Assets Perm Rest. Net Assets Total Net Assets Total Net Assets Total Net Assets Audited Statement of Financial Position (FINPOS_S) NET ASSETS Fund 1 Values Fund 2 Values Fund 3 Values Unrestricted Net Assets Unrestricted Net Assets Unrestricted Net Assets Temp Rest. Net Assets Temp Rest. Net Assets Temp Rest. Net Assets Perm Rest. Net Assets Perm Rest. Net Assets Total Net Assets Total Net Assets Total Net Assets 10 January 2018