Audit Guide Update

Transcription

1 Audit Guide Update April 13, 2017 Matthew Nethaway, Partner Jeffrey Jensen, Partner 2017 Crowe Horwath LLP

2 Agenda The Audit Guide Deleted Programs/Procedures New Programs/Procedures Amended Programs/Procedures Common Issues/Findings The Audit Report 2017 Crowe Horwath LLP 2

3 The Audit Guide 2017 Crowe Horwath LLP 3

4 Update Deleted Programs/Procedures None! New Programs/Procedures One Mental Health Amended Programs/Procedures Two mainly wording Crowe Horwath LLP 4

5 New Audit Procedures Mental Health Who is it applicable to? Any LEA or Special Education Local Plan Area (SELPA) that has mental health related services expenditures from Budget Item , Provision 14 (SACS Resource Code 6512) in Requirements Verify that the funds expended were used to provide mental health related services, including out-of-home residential services for emotionally disturbed pupils. For additional guidance on mental health services, visit CDE s website: If not in compliance: LEA is to make a correcting journal entry otherwise considered a finding Crowe Horwath LLP 5

6 Amended Audit Procedures California Clean Energy Act Prop 39 Removed that subsequent project expenditure reports were to be submitted to Citizens Oversight Board. Minor wording changes Crowe Horwath LLP 6

7 Amended Audit Procedures (cont d) BB Mode of Instruction Change what constitutes a finding. If any ADA reported to the CDE as classroom-based instruction was not generated in compliance with all of the preceding conditions, but was generated in full compliance with the requirements set forth in the Audit Guide Section CC (Nonclassroom-based instruction/independent Study), state in a finding the number of units of ADA that were misreported as classroom-based instruction but eligible for nonclassroom-based ADA Crowe Horwath LLP 7

8 Common Issues/Findings 2017 Crowe Horwath LLP 8

9 Common State Compliance Findings Unduplicated Local Control Funding Formula Pupil Counts Independent Study Kindergarten Continuance Instructional Time 2017 Crowe Horwath LLP 9

10 Unduplicated Local Control Funding Formula Pupil Counts Did not have proper supporting documentation to support their designation (FRPM, EL) Students were ineligible for designation Unduplicated pupil counts were inaccurate due to clerical errors Resource for what to provide auditors: Crowe Horwath LLP 10

11 Unduplicated Local Control Funding Formula Pupil Counts (cont d) Provision 2 or 3 or Community Eligibility Provision under the NSLP Supporting documentation for the school can be either: 1. Collected in the current year under audit; OR 2. Collected in the school s designated LCFF Base Year - Students enrolled after the base year should have supporting documentation from the year enrolled Crowe Horwath LLP 11

12 Independent Study The written agreement is not signed by the correct individuals The agreement must be signed by all three required parties The written agreement was signed after the District started claiming ADA Dates associated with the signature lines The written agreement doesn t contain all required information 2017 Crowe Horwath LLP 12

13 Kindergarten Continuance The District or the school site used an incorrect form The District or the school site did not complete a form for a retained student Link to approved CDE form: Crowe Horwath LLP 13

14 Instructional Time The school site revised the instructional bell schedule and didn t notify the District Office as a result of the revisions the school site fell below the required number of instructional minutes for the school year. The minimum number of minutes offered per day were found to be below the required minimum daily instructional minutes per Education Code Crowe Horwath LLP 14

15 To Avoid Potential Findings USE YOUR AUDITORS throughout the year Send examples of support ahead of time to ensure supporting documentation will satisfy the requirements. Send bell schedules and school calendars early in the year to ensure compliance. Send independent study agreement templates to ensure all required elements are present. If you are not sure, ASK! There is no harm in asking. Request auditors to reach out to CDE to get clarification in advance Crowe Horwath LLP 15

16 The Audit Report 2017 Crowe Horwath LLP 16

17 The Audit Report Overview Management s Discussion and Analysis Basic Financial Statements Two components: 1. Fund financials (from your unaudited actuals) 2. Government-wide financials Reconciliations Shows differences between fund financials and government-wide financials Notes to the Financials Provides the readers of the financial statements with further background on the District and more detailed information on the balances presents on the face of the District s financial statements 2017 Crowe Horwath LLP 17

18 The Audit Report Overview (cont d) Required Supplementary Information Budgetary Comparison Schedule compares originally adopted and final budget Required for the General Fund, and any major Special Revenue Fund Other Postemployment Benefits (OPEB) funding progress schedules CalSTRS and CalPERS required schedules 2017 Crowe Horwath LLP 18

19 Required Supplementary Information OPEB Schedule of Funding Progress 2017 Crowe Horwath LLP 19

20 The Audit Report Overview (cont d) Supplementary Information Non Major Fund financial information Agency Fund (ASB) financial information Organization who s who Scheduled of ADA - P-2 and P Annual and a corrected ADA column if any state compliance findings are identified that question ADA totals reported by the District Scheduled of Instructional Minutes Schedule of Expenditure of Federal Awards Audit adjustments unaudited actuals to audited numbers Schedule of Trends and Analysis General Fund only compares actuals year over year Schedule of Charter Schools 2017 Crowe Horwath LLP 20

21 The Audit Report Overview (cont d) Opinions Independent Auditor s Report on Financial Statements State Compliance Government Auditing Standards Federal Compliance Example: 2017 Crowe Horwath LLP 21

22 The Audit Report Overview (cont d) Findings and Recommendations Summary of Auditor s Results Financial Statements Federal State Compliance Prior Year Status 2017 Crowe Horwath LLP 22

23 Findings Summary of Auditor Results 2017 Crowe Horwath LLP 23

24 Findings Summary of Auditor Results 2017 Crowe Horwath LLP 24

25 Findings Summary of Auditor Results 2017 Crowe Horwath LLP 25

26 Findings When do they need to be reported?? Financial Statements Findings Significant Deficiencies (SD) and Material Weakness (MW) ONLY Deficiencies are often reported to support the District Example ASB is often only a deficiency not a SD or MW. It is often reported per the request of District management to hold sites accountable or because the Board members and management prefer to have all issues presented, small or large Crowe Horwath LLP 26

27 Findings When do they need to be reported?? (cont d) Federal Compliance Findings Uniform Guidance increased the threshold requirements Threshold from $10,000 to $25,000; or Known or likely fraud affecting the award 2017 Crowe Horwath LLP 27

28 Findings When do they need to be reported?? (cont d) State Compliance Findings We must report what the audit guide prescribes Materiality is not a factor for state compliance findings If an attendance finding is below 0.50 ADA there is no fiscal impact nor is P-2 revision required however the finding must still be reported Crowe Horwath LLP 28

29 GASB 54 Fund Balance Classifications Nonspendable Prepaids Inventory Revolving cash Restricted Any fund balance in a fund that is not the General Fund (Fund 01, 17 and 20) These funds are restricted by nature Committed Commitments require specific board action Assigned and Unassigned General Fund only 2017 Crowe Horwath LLP 29

30 GASB 34 Translating Fund Balance to Net Position Reconciliations of the Fund financial statements to the full-accrual financial statements. There are two reconciliations presented: Fund Balance to Net Position Change in Fund Balance to the Change in Net Position Typical reconciling items: Capital assets Long-term debt Deferred Outflows/Inflows of Resources Internal service fund balances Cash to accrual interest payable on long-term debt These reconciling balances exist in the footnotes of the audited financial statements and should agree to the same amount Crowe Horwath LLP 30

31 GASB 34 Translating Fund Balance to Net Position 2017 Crowe Horwath LLP 31

32 GASB 34 Translating Fund Balance to Net Position 2017 Crowe Horwath LLP 32

33 GASB 34 Translating Fund Balance to Net Position 2017 Crowe Horwath LLP 33

34 GASB 34 Translating Fund Balance to Net Position 2017 Crowe Horwath LLP 34

35 GASB 34 Translating Fund Balance to Net Position 2017 Crowe Horwath LLP 35

36 GASB 68 How to Interpret Use CalPERS and CalSTRS information for the District financial statements. Determine the District s proportionate share of net pension liability, deferred inflows, deferred outflows and pension expense Calculate the amount contributed to the pension subsequent to the measurement date Calculate the change in proportion Other amounts taken directly from CalPERS and CalSTRS reports Future changes take into consideration changes in the NPL of the pension, changes in deferred items and changes in the District s proportionate share Crowe Horwath LLP 36

37 GASB 68 Schedule of the District s Proportionate Share 2017 Crowe Horwath LLP 37

38 GASB 68 Schedule of the District s Proportionate Share 2017 Crowe Horwath LLP 38

39 GASB 68 GASB 68 Schedule of the District s Contributions 2017 Crowe Horwath LLP 39

40 GASB 68 Schedule of the District s Contributions 2017 Crowe Horwath LLP 40

41 GASB 68 Schedule of the Deferred Items 2017 Crowe Horwath LLP 41

42 Reading the Opinions Opinions rendered for your District/County Office Financial Statements Federal Compliance (if applicable) State Compliance Government Auditing Standards (GAS Opinion) First Five Program (if applicable) 2017 Crowe Horwath LLP 42

43 Reading the Opinions (cont d) Four possible types of opinions Unmodified Opinion Clean opinion Job well done Modified (Qualified) Opinion Everything looked good EXCEPT. Disclaimer Opinion Auditors were not given access or proper documentation needed to render an opinion Adverse Opinion Auditor and client cannot materially agree 2017 Crowe Horwath LLP 43

44 Reading the Opinions (cont d) Ensure consistency between the Summary of Auditor s Results page and the opinions themselves Make sure you understand the opinions and agree with their conclusions Read the opinions Ask your auditor for any clarification 2017 Crowe Horwath LLP 44

45 ASK THE AUDITOR QUESTIONS 2017 Crowe Horwath LLP 45

46 Thank you Matthew Nethaway, CPA Jeffrey Jensen, CPA In accordance with applicable professional standards, some firm services may not be available to attest clients. This material is for informational purposes only and should not be construed as financial or legal advice. Please seek guidance specific to your organization from qualified advisers in your jurisdiction Crowe Horwath LLP Crowe Horwath LLP, an independent member of Crowe Horwath International crowehorwath.com/disclosure