audit and cafr presentation

Audit and CAFR Presentation

Kathryn Perry, CPAPartner

Jump, Scutellaro and Company, LLP

Board Secretary Report

• Needs to be reconciled monthly• Cash-all cash on Treasurers report needs to be

included in the BSR and tie monthly• Restricted cash accounts need to tie out to the

reconciliation• If cash transfers occur they need to be made

timely and be reflected on the BSR• The Accounts Receivable balance needs to

reflect actual

Board Secretary Report

• Fund balance section generally doesn’t reflect all restricted amounts

• The revenue in Fund 10 generally is recorded at beginning of the year when setting up AR

• Expenditures are true month to month• Need to confirm where lease payments are

posted, new equipment items posted and if Super or BA salaries are charged to other line items

Treasurers Report

• Needs to be reconciled monthly• Include all cash accounts• Bank reconciliations should have minimal

reconciling items• Outstanding checks need to be examined after

6 months. NJ Escheat rules need to be followed

ESTIMATING YEAR END FBRevenues to date 67,000,000

Additional revenue (exclude Extraordinary aid)

7,500

Total revenues 67,007,500

Expenditures to date 52,000,000

May expenditures 7,000,000

June Expenditures 7,000,000

Total expenditures 66,000,000

Excess of Rev over Exp 1,007,500

2% of expenditures 1,320,000

ESTIMATING YEAR END FBPrior Year ending total Fund Balance 6,000,0000

Plus excess revenues over expend/less exp over revenues from above 1,007,500

Estimated Year End FB 7,007,500

Less: Reserved FB 2,500,000

Less: PY Excess Surplus 250,000

Less: Maint Res 1,200,000

Less: Cap Reserve 650,000

Less: Tuition Res 325,000

Less: Encumbrances 200,000

Remaining Unreserved 1,882,500

2% from above 1,320,000

difference 562,500

GAAP vs Budgetary

• CAFR is prepared in accordance with GAAP• Why is budgetary different• Fund 20 is on budgetary• Fund 30 is budgetary on Sched F-2a but not on

B-2

Why are there 3 Fund Balances?

• What page has the “real” Fund Balance• Why is that Fund Balance correct?• Why is there an A-1 and B-1 Fund Balance

Fund Balance Categories

• Nonspendable fund balance• Restricted fund balance• Committed fund balance• Assigned balance• Unassigned balance– Governments may not have all categories

applicable to a given year.

How do I figure out my Fund Balance

• Were there entries made against FB during the year?

• How to roll FB from prior year• How to break it out into the proper

components

IS FUND BALANCE ROLLINGPRIOR YEAR FUND BALANCE 2,500,000$ REVENUES-ACTUAL 85,000,000 EXPENSES WITHOUT ENCUMBRANCES 84,500,000 CURRENT YEAR FUND BALANCE 3,000,000

FROM BALANCE SHEET

TOTAL ASSETS 3,600,000 TOTAL LIABILITIES (650,000)

FUND BALANCE 2,950,000

DIFFERENCE 50,000 SHOULD BE ZERO

WHY? NEED TO RESOLVE

Reserved Fund Balances• Tuition Reserves – 2 years 10% max of contract per year• Capital Reserve – cannot exceed amount needed to

implement the LRFP• Maintenance Reserve – max no more than 4% of the

replacement cost of buildings• Emergency Reserve – max $250,000 • Waiver Offset Reserve – for approved waiver request• Legally restricted – in budget for next year• Debt Service Reserve

Have until June 30th to set up

Capital Reserve

• Separate cash account – not required but easier

• Interest earned is added to account• Be careful to actually withdraw the money if it

is used• Separate accounting in the footnotes• Need resolution/information of

withdrawal/add

Excess Surplus

• How to calculate• What Aids are excluded from calculation

EXCESS SURPLUS CALCULATIONPRIOR YEAR FUND BALANCE 2,500,000$ REVENUES 85,000,000 EXPENSES 84,500,000 CURRENT YEAR FUND BALANCE 3,000,000

FB FROM ABOVE 3,000,000 LESS: ENCUMBRANCES (35,000) TUITION RESERVE (60,000) MAINTENANCE RESERVE (125,000) CAP RESERVE (235,000) PRIOR YEAR EXCESS SURPLUS (225,000) LEGALLY RESTRICTED (950,000) OTHER - UNRESERVED FB 1,370,000

EXPENSES FROM ABOVE 84,500,000 TIMES 2% 2.00%

1,690,000 ADD NON-PUBLIC - ADD EXTRAORDINARY AID 38,500 MAX UNRESTRICTED 1,728,500

EXCESS SURPLUS (358,500) NO EXCESS IF NEGATIVE

Encumbrances

• How are they audited• See attached memo

Why are there 3 audit opinions

• Opinion on audited financials• Opinion on internal controls• Opinion on compliance with grant

requirements

The NJ Audit Program

• The 2012-2013 audit program not available yet

• May be released in July sometime• Always read the “Significant Changes” page• FYI-The audit program can answer many BOE

questions they ask the auditor

Section 1-General Compliance

• Appointment of Auditor– Risk Assessment– Internal control testing– Fraud analysis

• Minutes and resolutions– The auditor reads all minutes– Look for bids, required policies, unusual

discussions

Section 1-General Compliance• Treasurer???– No longer required– Board Secretary takes over roles of Treasurer– A Board Designee prepares the bank reconciliation– Surety bond on Board Secretary


• ASSA, DRTRS and SEMI– Testing can be done in November– Depending on size of District this can be very time

consuming– A specific number of students must be tested– The auditor will need to see many IEP’s, private

tuition contracts and transportation contracts


• Budgets and Transfers– Provide auditor with the audit year and the next

years budget– Transfers should be in minutes– Any County Superintendent approvals should be

provided– Transfers to Reserves-Very Important!!– Interfund Balances must cancel out


• Bids and Contracts/Purchasing– Auditor does test bids– Print out a report detailing all vendors being paid

in excess of bid threshold– State contracts should be used– Required review of open purchase orders at year

end-Encumbrance Testing– w/o QPA $26,000 w/QPA $36,000


• Chart of Accounts/Expenditure Classification– Expenditures must be reported in proper account– Auditors test voucher packages using the Chart of

Accounts– Auditor reviews the classification of Administrative

Expenditures• BA provides salary detail

– Over expenditures


• Year end Procedures– Review open PO’s– Review balance sheet accounts– Does the state aid equal the state aid report?– Has the state aid been reduced properly?– Special Revenue Fund-is the AR and Deferred

Revenues for each grant calculated– Audit entries?

Section 2-Specific Compliance

• Fund 10– Board Secretary and Treasurers Report• Auditor will tie each month out

– Bank reconciliations• Not all cash accounts on Cash Report• They all need to be reconciled monthly

– Petty Cash• Need to re-establish July 1


• Investments- use only approved Banks– Check Banking & Insurance website for list of

approved GUDPA banks• Revenue– Need State Aid report– Schedule in J’s of all other revenue– Cap Res interest needs to be segregated

• District Taxes– Auditor will confirm with town


• Tuition– Have available your DOE certified rates– Can only have reserve for 2011-12 and 2012-13

• On-behalf– Prepare a schedule detailing all reimbursements

and any Accts Rec at year end

Section 2-Specific Compliance• Compensation Reporting

• All 1099’s were filed• All required payrolls were certified• Get completed W-9’s for all vendors

• Pensionable Wages• Auditor will test pension reports• Reviewed as part of payroll testing

• 1.5% for health benefits• Calculated on base wages/paid monthly to NJ• Provide info on procedures• Provide cafeteria plan


• Refunds, e-rate, Cancellations– Current year cancellations go against expenditure– Prior year are Misc Income

• Travel Expenditures– See Memo

• Health Insurance– Rules on self-insured

• Sale and lease-back contracts


• Required Maintenance– Must spend 2% of replacement cost of new facility– Required schedule in J’s

• Reserves– Capital reserve schedule– Rules for use

• Excess Surplus– 2% of expenditures/minimum $250,000


• Fund 20– What goes in Fund 20?– Grants should have budgets– Teachers salaries charged should make sense– A grant cannot have Accts Rec and Def Rev– TPAF and FICA reimbursement not allowed on Fed

grants ( ED Jobs also included)– Calculation, form and payment made to NJ by

October 1


• Fund 30– Bonds and Grants– Purpose of Capital Project– Interest earned on bond proceeds– Arbitrage calculation– Unexpended bond proceeds– Schedule F-2 and F-2a-Budgetary basis


• Fund 40– Should detail the debt service revenue and

principal and interest payments– Should not have a fund balance– If it does have a FB budget it into the next year– Debt service aid assessment charged to 12-000-

400-800– Bond refunding-needs to be accounted for

properly


• Fund 60– What can be a proprietary fund• Cafeteria• Community School• Child Care• Summer Camp

– Can be run through operating cash acct but must be shown separate on Treasurers report

– Food Service Management Companies• SAS #70-amended by SAS #88 report


• Fund 60– Child Nutrition-monthly reporting-Audit testing– End of year Accounts Receivable– End of year inventory count– Provide Food Distribution program revenue– Need to create a Balance Sheet and Profit and

Loss statement like it was a true business


• Fund 90-Agency Funds– Payroll– Payroll Taxes– Unemployment– Student Activities• See checklist

– Other Groups working in the District


• Capital Assets– Capitalization level of $2,000– Depreciation Schedules-lives-methods– Using an outside agency– How capital assets flow from B-2 to A-2 in CAFR– How footnote should be prepared


• Long-Term Liabilities– Compensated absences– Early retirement incentive programs (ERIP)– Bonds– Footnote requirements

Single Audit

• Federal Requirements– OMB A-133– If grant expenditures exceed $500,000 then a

single audit must be performed– Low-risk Auditee-why you want to be one– ARRA-will always be considered High Risk– What is a major program? • Grant of $300,000 or 3% of award if in excess of $100

million

Single Audit

• Major program audit requirements– Must be audited once out of a 3 year period– See Type A program worksheet

• Schedule of Fed and State awards• Data Collection Form and filing• Findings• Corrective Action Plan

Section 3-Reporting

• Audit Submission– Due December 5

• Sample reports are in audit program• Sample footnotes• Statistical section-The J’s– Unaudited

Section 3-Reporting

• AMR-Auditors Management Report– Details out specific tests performed by auditor– Details all findings even if already stated in the

Single Audit information– What to watch out for…• Expenditures increased-did the surety bond• All payrolls signed off • Didn’t complete Audit Questionnaire properly

Questions

Feel free to call or email me with any questions

[email protected]

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audit and cafr presentation

Documents

fund balancewere

total fund balance6

real fund balancewhy

given year

estimated year end fb7

lrfpmaintenance reserve

yearcapital reserve

waiver offset reserve