Community College BAR Meeting Highline Community College

Transcription

1 Community College BAR Meeting Highline Community College February 16, 2017 Sarah Mahugh, MBA, CPA Program Manager, Financial Audit and Higher Education Erika Davis Higher Education Specialist, Team Everett W a s h i n g t o n S t a t e A u d i t o r s O f f i c e

2 Agenda 1. New State Auditor 2. NWCCU Accreditation Requirements 3. Federal Financial Aid Grants 4. Recent Audits and Lessons Learned 5. Accountability Audits Planned 6. Upcoming News W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 2

3 New State Auditor Washington State Auditor s Office Pat McCarthy State Auditor Sadie Armijo Assistant Director Local Audit Kelly Collins Director of Local Audit Keri Rooney Deputy State Auditor Mark Rapozo Assistant Director Local Audit Al Rose Director of Legal Affairs and State Audit Scott Nelson Director of Legislative Policy Troy Niemeyer Assistant Director of State Audit Ron Klein Deputy State Auditor Chuck Pfeil Director of Performance Audit Diane Perry Director of Operations Vacant Assistant Director Local Audit Cindy Evans Manager of Legal Affairs W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 3

4 NWCCU Accreditation Requirements SAO s conversations with NWCCU It is the College s responsibility to submit the audited financial statements to NWCCU. NWCCU needs evidence that the Board of Directors for each College has formally accepted the audit report. To make it easier for NWCCU, we are requesting that the audit report and the financial statements be posted in one location as one complete document. Our audit report is addressed to the Board of Trustees so having that letter in front of the statements also helps serve as assurance to NWCCU that the audit report and the results of the audit have been provided to the Board, and it s easier for NWCCU to have audit report and statements together in one location. W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 4

5 NWCCU Accreditation Requirements Financial Statement Reports are still posted to the State Board s website; however, our full audit report should now accompany the financial statements. EXAMPLE GOLD STAR AWARD Bates Technical College W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 5

6 NWCCU Accreditation Requirements *NEW* Breaking News An went out from NWCCU to all College Presidents requiring statements within 9 months of year end. What can you do as a College to meet this requirement? Prepare your financial statements Wait for further guidance from the State Board. They will be taking the lead role on discussions with NWCCU on this requirement. Some Colleges have already started preparing for this change by calling their assigned audit manager and scheduling their 16 and 17 audit Sept March and doing a combined 2 year audit. W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 6

7 Proposed Changes Federal Financial Aid Grants Annual Compliance and Financial Audits On August 5, 2016, the Department s Federal Student Aid Program s Compliance Office issued an electronic announcement requiring for audits beginning after January 1, 2018, and thereafter, an annual compliance audit by each institution. nstitleivstudentaidprograms.html W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 7

8 What this means Federal Financial Aid Student Financial Aid Programs that were previously not selected on an annual basis, because they did not meet the high-risk threshold will now be selected annually. Section 487(c) of the Higher Education Act of 1965, as amended (the HEA) requires each Title IV participating institution to submit to the Department a financial audit and a compliance audit on at least an annual basis [emphasis added]. This statutory provision provides that the audit requirements can be met by submission of either an audit conducted under the Title IV Audit Guide issued by the Department s Office of the Inspector General (OIG) or, if the institution is eligible, by submission of the results of an audit of the institution conducted under the Single Audit Act (Single Audit). W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 8

9 Share information/discussion To what extent are the Colleges aware of the proposed changes? Have there been any action plans discussed? Current Discussions at SAO Federal Financial Aid SAO would need audit work done to GAGAS standards to meet the federal single audit requirements. Currently, SAO has contacted the National State Auditor Association with our opinion against these proposed changes. W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 9

10 Recent Audits and Lessons Learned Importance of a detailed, secondary review of the financial statement package prior to submitting statements for audit Tips: Utilize the GFOA checklist ( research SAAM, work with the State Board, research GASB s Accounting for capital assets is complex Tips: Ensure requirements in SAAM chapter 30 are met (useful lives, depreciation, etc.), work with the State Board and/or SAO helpdesk on technical questions Confusion surrounding Foundations in relation to College audits NEW: Based on additional clarification for group audit standards, in most cases, our Office will no longer be performing CPA work paper reviews of College Foundations. However, we will still be contacting the CPA firm to perform required communications as well as reviewing the Foundation statements, notes, and audit report. W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 10

11 In our Communications to auditors, we will be adding a hint about which foundation note disclosures are expected to be relevant to college GASB 14 states that only some of the disclosures related to DPCU need to be presented in the reporting entity s financial statements. Note Disclosures At a minimum we expect disclosure about the foundation in the Reporting Entity section of the notes. Additionally, GASB codification 2600 and 2100 would suggest that significant transactions with the primary government should be disclosed. Section requires note disclosures about (significant) donorrestricted endowments, including the amounts of net appreciation on investments of donor-restricted endowments that are available for authorization. This college in TN discloses the foundation endowments in the notes for example: W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 11

12 Accountability Audits Planned Planned Accountability Audits in 2017 & 2018 Description FYE Team Cycle Bellevue College June 30, 2017 North King County Tacoma Community College June 30, 2018 Financial Audit Green River College June 30, 2018 Financial Audit 4 YR 4 YR 4 YR Community Colleges of Spokane June 30, 2018 Spokane 4 YR W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 12

13 Before the conversion Emerging Issue-Software Conversions Document any data cleanup of old system Document testing of the new system Document security evaluation of new system Obtain system documentation for the new system Provide adequate training for all users W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 13

14 Emerging Issue-Software Conversions During conversion Document crosswalks from the old system to the new system Confirm ending balances in the old system agree to beginning balances in new system Determine vendor s future access Develop security procedures for user access and passwords After conversion Re-evaluate user access after about six months Notify your audit team of system conversions W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 14

15 SAAM requirements described in chapters 30, 35, and 70 Emerging issue-small and Attractive assets Important highlights: SAAM : Perform a risk assessment of the agency s assets to identify those assets that are particularly at risk or vulnerable to loss SAAM : Have a policy in place for performing regular physical inventories at least once every other fiscal year. Policy should address who will conduct physical inventories, at what time of the year, who should perform reconciliations between actual counts and entity records, and how identified variances should be resolved. SAAM : Comply with RCW and immediately report losses to the Office of the State Auditor (SAO) W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 15

16 Best practices and internal controls over safeguarding assets Emerging issue-small and Attractive assets Establish segregation of duties between purchasing, receiving, disposal, physical inventory, and reconciliation oversight functions Develop procedures for adding, moving, and removing small and attractive assets from the master list Establish an Inventory Officer responsible for maintaining the small and attractive asset list, coordinating physical inventories, and acting as the point of contact for any decentralized departments or locations Maintain documentation of physical inventory conducted, results, and any follow-up on discrepancies between the list and actual counts Maintain documentation of disposed items (i.e. insurance claims, police reports, surplus declarations by governing body, damage report, sales receipt, etc.) W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 16

17 Conclusion You have been doing an amazing job! Thank you for preparing for your audits and having those crucial conversations with your audit teams. We know that so much new stuff has been thrown at you this year. Please contact either Erika or myself if you have anything further that you need and your assigned audit team is unable to assist. W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 17

18 State Auditor s office contacts Troy Niemeyer Sarah Mahugh, MBA, CPA Assistant Director Program Manager (360) (360) Troy.Niemeyer@sao.wa.gov Sarah.Mahugh@sao.wa.gov Erika Davis Alisha Shaw Community College Specialist Assistant Specialist (425) (509) x102 Everett, WA Spokane, WA Daviese@sao.wa.gov Shawa@sao.wa.gov W a s h i n g t o n S t a t e A u d i t o r s O f f i c e 18