a governmental audit quality center web event november 7, 2012

The New AICPA OCBOA Publications: What They Are and How They Apply to Governments and Not-for-Profits Using Cash, Modified Cash, and Regulatory

Frameworks

A Governmental Audit Quality Center Web Event

November 7, 2012

Governmental Audit Quality Center

Administrative Notes

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mailto:[email protected]


Presenters

Mike Crawford, CPAChairman Emeritus,

Crawford & Associates, P.C.

Mike Glynn, CPA, CGMASenior Technical Manager,

AICPA Audit and Attest Standards Team

Shelly Hammond, CPAPartner,

Allen, Gibbs, & Houlik, L.C.

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What we will coverAICPA Other Comprehensive Bases of Accounting (OCBOA) Practice Aids

Why OCBOA/Special Purpose Framework (SPF)?

Standards and Guidance

Financial Statements and Frameworks

Measurement and Recognition

Presentation & Disclosure

Materiality

Auditor Reporting

Questions6

Governmental Audit Quality Center 7

Practice Aid: Applying OCBOA in State and Local Governmental Financial Statements

http://www.cpa2biz.com/AST/Main/CPA2BIZ_Primary/AuditAttest/IndustryspecificGuidance/Government/PRDOVR~PC-006614/PC-006614.jsp

Product# APAOCBO12P







Practice Aid: Accounting and Financial Reporting Guidelines For Cash- and Tax-Basis Financial Statements

http://www.cpa2biz.com/AST/Main/CPA2BIZ_Primary/AuditAttest/PRDOVR~PC-006701/PC-006701.jsp?cm_vc=PDPZ1

Product# APACTB12P





9Governmental Audit Quality Center

Why OCBOA/SPF?

Understanding the Reasons for and Limitations of Issuing Non-GAAP Financial Statements


GASB GAAP Research

March 2008 Governmental Accounting Standards Board (GASB) Research Report, State and Local Government Use of GAAP for General Purpose External Financial Reporting

Only covered 31,221 of the 89,526 units of state and local governments• 98% of all state and local revenue accounted for by these 31,221

governments

Study estimates that:• 67% of 31,221 governments covered follow Generally Accepted

Accounting Principles (GAAP) (26% of those were required to follow GAAP)

• 33% of the 31,221 governments do not follow GAAP

• No estimate for the other 58,305 smaller governments


Not-for-Profits

The National Center for Charitable Statistics lists more than 1.5 million nonprofit organizations that are registered in the U.S.• California: 160,000• Kansas: 17,000

Numerous small entities that do not follow GAAP


Why are OCBOA/SPFs Used?

Accounting is easier for some accounting staff to grasp

Quicker year-end closing

Financial statements less complex to prepare and audit

Costs less to prepare and audit annual statements

More understandable for unsophisticated users

Generally linked more directly to budget

Consistent with the short-term focus of many governing

bodies and many taxpayers and donors

May be required by state law or regulatory agencies


Understanding OCBOA/SPF Limitations

Not a comprehensive economic measure• Pay-as-you go does not measure full costs of service, only what is affordable, and

all assets and liabilities

May not satisfy certain users• Rating agencies, creditors, investors, taxpayers, donors and members of governing

bodies may have certain needs not met –

Financial decisions may be misguided• Pay-as-you-go may mislead decisions makers when determining cost of service,

setting rates, and balancing the budget

Financial condition and results of operations can be more easily

manipulated• Leaving payables in a drawer, ignoring receivables collection problems, recording

cash transactions in improper period


Standards and Guidance

Changing Standards for OCBOA and Special Purpose Frameworks and Reporting


Statements on Standards for Accounting and Review Services (SSARS) 19, Compilation and Review Engagements• Effective date: For financial statement periods ending on or after

December 15, 2010

Statement on Auditing Standards (SAS) 122, Clarification and Recodification• Issued as a result of the AICPA Clarity project to converge

current standards with those of the International Auditing and Assurance Standards Board and to improve the formatting and clarity of the audit standards

• AU-C Section 800 – Special Considerations—Audits of. Financial Statements Prepared in Accordance With Special Purpose Frameworks

• Effective for periods ending on or after December 15, 2012

2012 edition of AICPA SLG OCBOA Practice Aid

2012 edition of AICPA OCBOA Practice Aid

Standards or Guidance Affecting OCBOA


Introduction of new term SPF to define acceptable alternative non-GAAP bases of accounting including OCBOA

Inclusion of “contractual basis” as a form of SPF but not a form of OCBOA

Increased requirements for auditors in understanding and accepting engagements, including understanding of• The purpose for which the statements are prepared• The intended users of the statements• Management’s steps to determine that the SPF is acceptable in the

circumstances• For contractual basis presentations, any significant management

interpretations made in applying the basis

New requirements for forming opinions and auditor reporting

Summary of Clarity Project Changes


Financial Statements and Frameworks

Defining General and Special Purpose Financial Statements and Frameworks


Source: SSARS 19

A structured representation of historical financial information, including related notes, intended to communicate an entity’s economic resources and obligations at a point in time or the changes therein for a period of time in accordance with a financial reporting framework.

Financial Statements Defined


A set of criteria, encompassing accounting standards

established by an authorized or recognized standards setter

organization, used for all material items appearing in the

financial statements to determine:• Measurement

• Recognition

• Presentation

• Disclosure

Determines both form and content of the financial statements

Includes:• General purpose frameworks

• Special purpose frameworks

Financial Reporting Framework


A financial reporting framework that consists of accounting principles recognized as generally accepted• U.S. GAAP issued by:

The Financial Accounting Standards Board (FASB)The GASBThe Federal Accounting Standards Advisory Board (FASAB)

• IFRS issued by: Issued by the International Accounting Standards Board

(IASB)

General Purpose Framework


A financial reporting framework other than GAAP, which is one of the following bases of accounting:

• Cash basis• Tax basis• Regulatory basis

• Contractual basis

Special Purpose Framework

Commonly referred to OCBOA

Note: New OCBOA for small private companies also being considered by AICPA.


The financial reporting framework adopted by management and, when appropriate, those charged with governance in the preparation of the financial statements that is acceptable in view of the nature of the entity and the objective of the financial statements, or that is required by law or regulation.

Example: Cash basis of accounting adopted by management of a small government that is considered acceptable for their purposes.

Applicable Financial Reporting Framework


Measurement and Recognition

When and What to Report and How to Value Items in OCBOA Financial Statements


The cash receipts and disbursements basis of accounting (pure

cash basis)• Limited to the reporting of cash and cash equivalents and changes therein

Modifications of the cash basis having substantial support

(modified cash basis)• Modifications to cash receipt and disbursement transactions or events only

Just like modified accrual starts with accrual basis as its root and works

back based on cash inflows and outflows, modified cash basis starts with a

cash transaction or event and works forward with a substantial support

modification of that cash transaction or event

• Modifications should have substantial support in GAAP or other accounting

literature and be logical

Such as capitalizing fixed assets resulting from a cash disbursement and

recording depreciation on such assets

Cash Basis


Modified Cash Basis

Essentially results in cash inflows and outflows that provide a future benefit or obligation being spread out over multiple accounting periods• Capital assets and related depreciation over estimated useful

lives (future benefit)• Long-term debt and its repayment requirements (future

obligations)

Does not mean recording certain elements on a cash basis and other elements on a full GAAP basis• In other words, modifications to record investments arising from

cash transactions does not mean those investments should be adjusted for changes in fair value pursuant to GAAP

• No accruals or non-cash transactions recorded


New Guidance! Cash and Modified Cash Basis

2012 Practice Aids include new guidance that indicates you may include certain one-step transactions that are in substance two-step cash transactions in cash or modified cash basis frameworks• Equipment loan where lending institution pays cash directly to a

vendor rather than giving the cash to the borrower who then pays the vendor

• On-behalf payment of cash by one government for the benefit of another, such as a state contribution of cash to a state-wide pension plan on behalf of and for the benefit of a local government

• Does not include non-cash transactions or events such as capital leases or donations of capital assets



2012 Practice Aids include new guidance that discusses accounting for cash held for others or cash received that is not available for use until a future period• Examples could include:

Taxes collected by one government for subsequent distribution to other governments

Utility deposits received and held for later return to customers Cash held in an agency capacity for consumers or specified

beneficiaries of a not-for-profit

• Pure cash basis presentations should report or disclose these restrictions or constraints on cash availability in fund balance or net position

• Modified cash basis should report these as liabilities or deferrals



2012 Practice Aids include new guidance that discusses accounting for bank overdrafts in a cash basis or modified cash basis framework• Generally, bank overdrafts may be netted with other cash

balances of the reporting unit • If the result is an overall negative cash balance:

Under the pure cash basis, the bank overdraft would simply be shown as negative cash on hand at the end of the period.

Under modified cash basis, the bank overdraft should be classified as either a current liability in a non-pooled cash environment, or if the entity uses a pooled cash system as an interfund loan from a fund with a positive share of the pooled cash


New Guidance! Modified Cash Basis

2012 Practice Aids indicate that write-downs or write-offs may be appropriate under a modified cash basis framework• Examples could include permanently impaired investments and

capital assets or debt that is forgiven• Temporary changes in the fair value or impairments of an asset

or liability should not be recognized• If modified cash basis assets or liabilities have been

permanently impaired and have no future cash value or represent no future obligation against cash, then it would be appropriate to write-down or write-off such amounts in modified cash basis financial statements.


New Guidance! Modified Cash Basis

2012 Practice Aids indicate that modified cash basis framework selected should meet primary users needs and not be misleading• Encouraged to be either a simple modification, such as adding

investments acquired with cash, or be consistent with all elements (all assets and liabilities arising from cash transactions)

• Not intended to be a free-for-all cherry picking of modifications, such as picking up all assets arising from cash transactions but no liabilities

• Should be prepared to defend how the decision to modify or not modify is a logical and consistent application of the accounting policy and does not result in misleading financial statements for the purposes for which they are intended


Regulatory Basis

A basis of accounting in accordance with the requirements or financial reporting provisions of a regulatory agency to whose jurisdiction the entity is subject• Regulator and regulations determine the framework, including

measurement, recognition, presentation and disclosure requirements

• Example: A basis of accounting other than GAAP prescribed by a state agency for school districts for filing with the state department of education


New Guidance! Regulatory Basis

Regulatory basis cannot simply be cash basis or modified cash basis• AU-C sec.800.A5 indicates that the cash and tax bases of

accounting are not regulatory bases of accounting• 2012 Practice Aid states that in some circumstances, a

regulatory agency may prescribe requirements or allow entities subject to their jurisdiction to follow the cash or modified cash basis of accounting without any further description of specific recognition, measurement, presentation or disclosure requirements. In these cases, the financial statements should be considered prepared under the cash or modified cash basis of accounting and not a regulatory basis of accounting


Presentation and Disclosure

Form and Content of the OCBOA Financial Statements


Financial statements are ordinarily comprised of a

complete set of financial statements The requirements of the applicable financial reporting framework

determine the form and content of the financial statements, and

what constitutes a complete set of financial statements.

For example, for a general-purpose state or local government, a

complete set would include the government-wide statements, fund

statements, and related notes in accordance with GASB 34/35

May also be less than a complete set (often used in

regulatory or contractual basis presentations):• A single financial statement; or

• Financial statements without notes

Financial Statements Form and Content


General purpose financial statements• Financial statements prepared in accordance with a framework

recognized as GAAP

Special purpose financial statements• Financial statements prepared in accordance with a special

purpose framework other than GAAP (such as cash basis, tax basis, regulatory basis, or contractual basis)

• Includes statements prepared using “OCBOA frameworks” defined as cash basis (including modifications), tax basis and regulatory basis

Types of Financial Statements


AU-C Section 800, Exhibit B – states that if GAAP

sets forth requirements that apply to the

presentation of financial statements, the OCBOA

financial statements may either comply with those

requirements or provide information that

communicates the substance of those requirements.• In other words, GASB-34/35 presentation requirements apply, in

substance, to OCBOA basic statements of state and local

governments issuing a complete set of financial statements

Applicability of GAAP Presentations to OCBOA Statements


Not-for-profit Financial StatementsFor not-for-profits, a complete set of financial statements under modified cash or income tax basis should include:• Statement of Assets, Liabilities and Net Assets (rather than

Statement of Financial Position)• Statement of Revenues, Expenses and Other Changes in Net

Assets (rather than Statement of Activities)• Statement of Cash Flows• Statement of Functional Expenses for Voluntary Health and

Welfare Organizations (VHWO)• Notes to the Financial Statements

Statement titles should be adjusted to include “Modified Cash Basis” or “Income Tax Basis”. For example: “Statement of Functional Expenses – Income Tax Basis”

Pure cash basis statements would only include a Statement of Cash Receipts and Disbursements, plus Notes to the Financial Statements


For a general-purpose state or local government (state, county,

city), cash and modified cash basis complete basic financial

statements should contain (with modified titles):• Government-Wide Financial Statements

Statement of Net Assets

Statement of Activities

• Fund Financial Statements

Governmental Funds

Proprietary Funds

Fiduciary Funds

• Notes to the Financial Statements

Some statements could be combined if substance of presentation

requirements is met

May optionally include Supplementary Information

General-Purpose Government Financial Statements


For a special-purpose government engaged solely in

business-type activities (utility district or authority),

cash and modified cash basis complete basic

financial statements should contain (with modified

titles):• Statement of Net Position

• Statement of Revenues, Expenses and Changes in Net Position

• Statement of Cash Flows

• Notes to the Financial Statements

May optionally include Supplementary Information

BTA Special-Purpose Government Financial Statements


GAAP Required Supplemental Information (RSI) is

not required in OCBOA financial statements,

including:• Management’s Discussion and Analysis

• Budgetary Comparison Information (if not presented in basic

statements)

• Pension and OPEB funding status schedules

May optionally include certain GAAP-RSI as

Supplementary Information (SI) that can accompany

OCBOA basic financial statements• MD&A and Budgetary Comparison Information encouraged

New Guidance! GASB GAAP-RSI Not Applicable to OCBOA


2012 OCBOA Practice Aid – Applying OCBOA in State and Local Government Financial Statements indicates that supplementary or other information that accompanies the OCBOA basic financial statements may be prepared in accordance with the requirements of any of the following:• the applicable OCBOA framework applied in the basic

statements such as cash or modified cash basis• GAAP• regulatory or contractual requirements• management’s criteria, or• other requirements.

New Guidance! Basis of Accounting for SI


For example, a supplementary information schedule of state grant award activity could be presented in accordance with the regulatory requirements of the applicable granting agency, even if those requirements differ from the OCBOA framework and basis of accounting applied in the basic financial statements

To give an in-relation-to opinion on the SI pursuant to SAS 119, the information presented in the SI must be reconcilable to the basic financial statements or accounting records used to prepare the basic statements

New Guidance! Basis of Accounting for SI


The substance of GAAP presentation requirements may be

communicated using qualitative information and without modifying

the financial statement format.

Examples:• Instead of reporting net position or fund balance by classification on the face of the

financial statements, such breakdown could be included in the footnotes

• Accounting Standards Codification (ASC) 958, Not-for-Profit Entities requires not-

for-profits to present net assets by class (unrestricted, temporarily restricted,

permanently restricted): could be presented with the statements, or disclosed in

the Notes.

• Information about extraordinary or special items could be disclosed in the notes

rather than separately presented in the statements

• Cash flow statement for proprietary funds would not be needed for pure cash basis

statements if substance of presentation requirements are already met in the other

statements

In-Substance Presentation Guidance


Authoritative literature is silent regarding the financial statement

captions to use within OCBOA financial statements

2012 Practice Aids indicate that because of the lack of

authoritative literature, there is no requirement to modify standard

GAAP financial statement captions in OCBOA statements

• If modifications are desired, some examples for OCBOA statements could

include “Revenue collected over (under) expenditures/expenses paid”,

“Net income—modified cash basis”, “Regulatory basis cash receipts”, and

similar caption modifications appropriate to the OCBOA framework

• It is however important to ensure that financial statement titles are

appropriately modified to clearly indicate the OCBOA framework applied

to the entire statement

New Guidance! Presentation Captions


Requirements of the regulatory provisions or contractual agreements will determine the presentation requirements and financial statement form and content under these special purpose frameworks

When form and content of presentation is not defined in the regulations or contractual agreement, follow the GAAP framework presentation form and content requirements to the extent considered appropriate

Regulatory or Contractual Presentations


Fund Beginning Cash Balance

Receipts Disbursements Ending Cash Balance

General $255,060 $1,373,200 $1,428,910 $199,350

Restricted Tax 6,335 84,910 86,745 4,500

Sinking 10,630 126,540 124,770 12,400

Bond Project 834,725 9,835 722,380 122,180

Museum Trust 22,570 2,110 180 24,500

Total $1,129,320 $1,596,595 $2,362,985 $362,930

Less: Outstanding Encumbrances 43,800

Ending Unencumbered Cash $319,130

Example – Governmental Regulatory Presentation


Authoritative Guidance• SSARS 19, par. 2.19• AU-C Section 800, pars. 17, A19-A23• AU-C Section 800, Exhibit B• AICPA SLG Audit Guide – Chapter 15

Non-authoritative Guidance• 2012 AICPA SLG OCBOA Practice Aid – Chapter 3• 2012 AICPA OCBOA Practice Aid – Chapter 3

Disclosures in 3 broad areas1. A summary of significant accounting policies (SSAP)

2. GAAP required disclosures to the extent applicable to elements contained in the financial statements

3. Other general informative disclosures

Basic Disclosure Guidelines


A summary of significant accounting policies including:• A description of the financial reporting entity

• A description of the financial statement presentation policies

• A description of the OCBOA used, and the OCBOA differences from GAAP (not quantified)

• Policies related to specific assets, liabilities, and net position/fund balance accounts

• Policies related to specific revenue and expenditure/expense accounts

SSAP Disclosures


Informative disclosures similar to those required by GAAP if the statements contain items that are the same or similar to those in GAAP statements• Cash and investments (including risk disclosures)• Restricted assets• Capital assets• Long-term debt• Interfund balances and transactions• Net position, fund balances or temporarily or permanently

restricted net assets• Revenues and expenditures/expenses

However, the disclosures need not include information that is not relevant to the basis of accounting or framework used

Financial Statement Element Disclosures


Other general informative disclosures (limited to the extent applicable to the basis of accounting or framework used)• Pensions and OPEB• Risk management• Commitments and contingencies• Use of estimates and other uncertainties• Subsequent events• Related party transactions• Material noncompliance• Going concern issues• Unconditional promises to give• Endowments

Other General Informative Disclosures


GAAP disclosure requirements that are not relevant to the OCBOA framework measurement of the applicable elements or accounts, need not be considered. For example:• Capital asset or long term debt activities, balances, and debt

service requirements for cash basis (when cash basis is not modified for such balances)

• Fair value of investments, when presentation does not adjust for fair value changes (could be valuable optional disclosure)

• Pension and OPEB actuarial calculations and information for cash basis or modified cash basis presentations

• Use of estimates disclosures, when presentation has no estimates

Disclosure Applicability


Disclosure Requirement ApplicableNot

Applicable

Plan Description X

Funding Policy and Required Contribution Rates X

Contributions Made X

Actuarial Methods and Assumptions X

ARC, Annual Pension/OPEB Cost and Net Pension/OPEB Obligation X

Three Year Trend Data on Annual Pension/OPEB Costs, Contributions, and Net Pension/OPEB Obligation X

Funded Status of the Plan (Funding Progress) X

Example Disclosure Applicability – Government Pension/OPEB DB Plan in Cash Basis


2012 Practice Aids indicate that certain disclosures not required under applicable OCBOA framework could still add user value and help compensate for the inherent presentation limitations of OCBOA• Fair value of investments when significantly different from cost,

even though presentation does not adjust for fair value changes

• Existence of material donated assets

• Significant amounts of held accounts payable at period end in cash basis presentations

• Significantly unfunded or underfunded obligations

• Significant risks in derivative instruments

• Promises to give

New Guidance! Disclosure Applicability


MaterialityApplication of Materiality Concepts

to OCBOA Financial Statements


General guidance in SSARS 19:• Misstatements, including omissions, are considered material if

they, individually or in the aggregate, could reasonably be expected to influence the economic decisions of users on the basis of accounting applied

• Judgments about materiality are made in light of surrounding circumstances and are affected by the size and nature of a misstatement or combination of both

• Judgments about matters that are material to users are based on a consideration of common financial information needs of users as a group rather than the needs of a specific individual user

Matter of professional judgment and is affected by the accountant’s perception of users needs

Materiality – General Guidelines


Materiality is often discussed within the applicable financial reporting framework• For non-governmental entities, generally established at the

financial statements level as a whole• For state and local governments:

General purpose frameworks (GAAP) – established using the reporting units and opinion units concepts

Special purpose frameworks (OCBOA and contractual) – depends on the framework’s presentation and any regulatory or contractual requirements

Materiality within Frameworks


Cash basis and modified cash basis statements• Generally the same as GAAP statements

• For example, based on concepts of reporting units and opinion units for state and local governments

Regulatory basis statements• Ideally would be based on the regulatory requirements as

specified by agreement or regulation

• If not specified, consult with regulatory agency and audit client or users of financial statements to determine materiality

• When in doubt, follow general guidance as defined in SSARS 19

Materiality – OCBOA Frameworks


Fund Beginning Cash Balance

Receipts Disbursements Ending Cash Balance

General $255,060 $1,373,200 $1,428,910 $199,350

Restricted Tax 6,335 84,910 86,745 4,500

Sinking 10,630 126,540 124,770 12,400

Bond Project 834,725 9,835 722,380 122,180

Museum Trust 22,570 2,110 180 24,500

Total $1,129,320 $1,596,595 $2,362,985 $362,930

Materiality – Governmental Regulatory Basis

In this presentation, if the regulatory framework does not define or discuss materiality, what amount(s) of misstatements would be considered quantitatively material?


Auditor Reporting

Auditor Reports on OCBOA Financial Statements


In forming opinion, evaluate whether OCBOA

financial statements:• Are suitably titled

• Include an appropriate SSAP

• Adequately describe difference between OCBOA and GAAP

• Include adequate disclosures similar to GAAP and any additional

needed informative disclosures

• Consistently apply applicable OCBOA accounting policies

• Are free from any material departures from applicable OCBOA

framework

Forming Opinions


Material departures from applicable OCBOA framework’s requirements can relate to:• Measurement – such as inappropriate adjustment to fair value

for investments reported on a modified cash basis• Recognition – such as inappropriate accrual of revenue and

related receivables reported on a cash or modified cash basis• Presentation – such as omission of government-wide financial

statements for general purpose government reported on a cash or modified cash basis

• Disclosure – failure to disclose the differences between GAAP and the OCBOA framework applied

Departures from Applicable OCBOA Framework


Follow basic auditor reporting requirements for general

purpose financial statements in AU-C Sections 700, 705 &

706, supplemented by specific requirements applicable to

special purpose financial statements in AU-C Section 800

Include in auditor’s report:• Headings over various report paragraphs or sections

• Reference to management’s responsibility for acceptability of OCBOA

framework when management has a choice of frameworks

• Description of the purpose of regulatory basis statements

• Emphasis of matter paragraph that explains the use of OCBOA

• See accompanying Appendixes A through D for example reports

New Standards! Reporting on OCBOA Financial Statements


New Standards! Headings

Management’s Responsibilities

Auditor’s Responsibilities

Opinions• Basis for Opinions other than Unqualified• Disclaimer, Adverse, or Qualified Opinions• Unqualified Opinions

Report on Supplementary Information

Report on Other Information

Basis of Accounting

Restriction on Use (for regulatory restricted use)


New Standards! Management’s Responsibility

Report must include a reference to management’s responsibility for determining acceptability of OCBOA framework when management has a choice of frameworks to apply

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with the cash basis of accounting described in Note X; this includes determining that the cash basis of accounting is an acceptable basis for the preparation of the financial statements in the circumstances. Management is also responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error


New Standards! Purpose of Regulatory Basis Statements

For regulatory basis statements, report should describe the purpose for which the financial statements were prepared

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance with the financial reporting provisions of Section Y of regulation Z of Any State Statutes, as described in Note X, to meet the reporting requirements of Any State. Management is also responsible for the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of the financial statements that are free from material misstatement, whether due to fraud or error


New Standards! Emphasis of Matter Paragraph on Basis of Accounting

For reports on OCBOA financial statements (including regulatory basis statements that are not intended for general use) report should include an emphasis of matter paragraph immediately following opinion paragraphs that describes (or refers to a note that describes) the OCBOA framework applied and how it differs from GAAP

Basis of AccountingWe draw attention to Note X of the financial statements which describes the basis of accounting. The financial statements are prepared on a modified cash basis of accounting, which is a basis of accounting other than accounting principles generally accepted in the United States of America. Our opinions are not modified with respect to this matter.


New Guidance! Reporting on Exclusion of GAAP-RSI

It is important to note that an auditor’s report on OCBOA financial statements should not be modified for the exclusion of GASB GAAP-RSI • There can be no information considered RSI that must

accompany OCBOA basic financial statements. Therefore, the exclusion of such information would not be considered a departure from the OCBOA framework.

Any GASB GAAP-RSI type information optionally included in OCBOA financial statements would be reported on as supplemental or other information


Cash Basis (including Modified Cash Basis) and Tax

Basis

Regulatory Basis Restricted Use

Regulatory Basis General Use

Opinion(s) Single opinion on SPF Single opinion on SPF Dual opinion on GAAP and SPF

Emphasis of matter Yes Yes No

Description of purpose No Yes Yes

Restriction on use No Yes No

OCBOA Reporting Guide


Questions ?????

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GAQC Resources

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GAQC ResourcesGAQC Web Site can be a resource!(www.aicpa.org/GAQC)

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http://www.aicpa.org/GAQC


GAQC Resources

Archived news alerts and member web events

Tools and Practice Aids

Illustrative Report Examples and Peer Review Checklists

Member discussion forum

Links to other key organizations, news items and documents

Marketing toolkit

Governmental event and conferences summary


Just Released!

Auditee Resource Center – Open to the Public• Why quality audit important?• Auditee resources – some existing resources for auditors and

some new (single audit, Yellow Book, other compliance audits, and financial statements audits)- Archived Web events- Practice aids- Articles- Access to GAQC Alerts

• Links to Publications• Link to Conferences and other training available• Access the Auditee Resource Center

http://www.aicpa.org/INTERESTAREAS/GOVERNMENTALAUDITQUALITY/RESOURCES/AUDITEERESOURCECENTER/Pages/AuditeeResourceCenter.aspx


GAQC Resources – A Sampling of Tools & Aids

New! Yellow Book Independence Practice Aid

Single Audit Practice Aids • SEFA Practice Aids (both for the auditor and auditee)• Internal Control Practice Aids• Illustrative Auditor’s Reports

Peer Review Checklists

Archived GAQC Alerts and GAQC Web events

AICPA Audit Guide, Government Auditing Standards and Circular A-133 Audits

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http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/Resources/AuditPracticeToolsAids/Pages/YellowBookAuditToolsandAids.aspx

http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/Resources/AuditPracticeToolsAids/Pages/YellowBookAuditToolsandAids.aspx

http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/Resources/AuditPracticeToolsAids/Pages/Single%20Audit%20Practice%20Aids.aspx

http://www.aicpa.org/INTERESTAREAS/GOVERNMENTALAUDITQUALITY/RESOURCES/ILLUSTRATIVEAUDITORSREPORTS/Pages/default.aspx

http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/Resources/AuditPracticeToolsAids/Pages/Peer%20Review%20Checklists.aspx

http://www.aicpa.org/INTERESTAREAS/GOVERNMENTALAUDITQUALITY/NEWSANDPUBLICATIONS/GAQCALERT/Pages/gaqcalertsarchive.aspx

http://www.aicpa.org/InterestAreas/GovernmentalAuditQuality/Resources/Pages/Archived%20GAQC%20Conference%20Calls.aspx

https://www.cpa2biz.com/AST/Main/CPA2BIZ_Primary/AuditAttest/IndustryspecificGuidance/NotforProfit/PRDOVR~PC-012743/PC-012743.jsp

https://www.cpa2biz.com/AST/Main/CPA2BIZ_Primary/AuditAttest/IndustryspecificGuidance/NotforProfit/PRDOVR~PC-012743/PC-012743.jsp


GAQC Resources – Archived GAQC Web Events from Past Year

Understanding Indirect Costs

The HHS Head Start Program*

GASB and FASB Updates

Challenges with Fair Value Measurements for NPOs*

New 2011 Yellow Book*

New Group Audit Standards Impact on Governmental and NPO Audits

New HUD Rules for Banks*

Understanding the Effect of the Clarified Auditing Standards on Governmental and NPO Audits

Updated SEFA Practice Aids (for SAS 119)

Subrecipient Monitoring: An Auditee and Auditor Perspective*

Understanding the New AICPA Yellow Book Independence Practice Aid*

Annual GAQC Webcast on Planning for 2012 Governmental and NPO Audits

2012 Compliance Supplement and Related Best Practices

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* Open to the Public


How do I get my CPE certificate?

Just follow these steps:1. Log on to CPA2Biz.com

2. Click on “My Account” at the top of the page and enter your CPA2Biz/AICPA username and password.

3. Click on “My Web Events” tab.

4. Click on “AICPA Learning Center Transcripts and Certificates” link (a new window or tab will open).

5. On the AICPA Learning Center, click on “My Transcript” in the left-hand menu.

6. Locate your completed course and click on “Go” to retrieve your certificate.

If you need assistance with locating your certificate, please contact the AICPA Service Center at 888.777.7077 or [email protected].

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http://www.cpa2biz.com/

mailto:[email protected]


Evaluations

Please take a few minutes to let us know what you thought about today’s Web event.

Click on the link below to begin a short evaluation.

https://www.surveymonkey.com/s/BC5KJDH

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a governmental audit quality center web event november 7, 2012

Documents

aicpa audit

popup markers

participation tab

technical questions

presentation slides

aicpa service center

cpe certificate

end of todays presentation