CFO Auditing Standards in the 21 st Century By James P. Kearney Performance Management Consulting, Inc. 27 July 2005.

Slides:



Advertisements
Similar presentations
Auditing the Purchasing Process
Advertisements

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 14-1 Chapter Fourteen Auditing Financing Process: Prepaid Expenses.
P ROPERTY, P LANT AND E QUIPMENT (PPE). S TRUCTURE Recognition of an asset Changes Classification of property, plant and equipment Depreciation.
Service Provider Support of Audit Readiness Office of the Under Secretary of Defense (Comptroller) March 14, 2011.
Award Close-out Procedures-an overview Review award documents Complete Reconciliation Sheet Budget Reconciliation Expense Reconciliation Oracle Balances.
FALL 2006 FOCUS November 14-15, 2006 APA UPDATE Bill Cole, Deputy Auditor Auditor of Public Accounts.
“Going to Audit” Presented To: Navy/Marine Corps Service Day Workshop American Society of Military Comptrollers (ASMC) Professional Development Institute.
6/14/11 - Slide 1 FIMS/STARS RECONCILIATION June 14, 2011.
Auditing the Financing/Investing Process: Prepaid Expenses; Intangible
Fixed Assets Policies and Procedures that directly affect Your work, Your budget And your responsibility for protection of WSSU assets as custodian department.
GAO FAM 2010/2020 Checklists Overview
University of Minnesota Internal/External Sales “Equipment Purchases and Depreciation” Plant Funds, Transfers and Record Keeping Requirements.
Property, Plant, and Equipment; Depreciation and Depletion.
University of Minnesota Internal/External Sales “Equipment Purchases and Depreciation” Plant Funds, Transfers and other Requirements.
Prepared by: Angela Davis CA, CFE, MSc Booth University College
SAP R/3 Materials Management Module

Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
Slide © The McGraw-Hill Companies, Inc., 2006 Property, Plant, and Equipment; Depreciation and Depletion l At the same time, we also look at:  Gain.
Audit Programme. Audit Assertions  As part of the planning stage, auditors need to prepare audit tests to test the account areas.  To assist the auditors.
Fixed Assets.
POWER LUNCH AUDIT PREPARATION MIKUNDA, COTTRELL & CO. Certified Public Accountants and Consultants 3601 “C” Street, Suite 600 Anchorage, Alaska (907)
Presented by Amanda Winn and Paula Gustafson June 14, 2011.
McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved
Agreed Upon Procedures and Audit Evidence Requirements ASMC-PDI June 2010 Gregory N. Sinclitico.
Fiscal Compliance for Title III Keisha Davis Monitoring & Compliance Section School Business Division
RDML K. Taylor | DHS CFO Brief | 25 JAN 2010 Margo Sheridan, CDFM, Comptroller, U S Coast Guard Presented to: American Society of Military Comptrollers.
Matching Accounting and Financial Reporting to the Asset Life Cycle Bob Mahaney, CPPS Mgr, Program Accounting & Finance MD Anderson Cancer Center.
Effective Management and Compliance 1 ANA GRANTEE MEETING  FEBRUARY 5, 2015.
◦ (a) The prior period's closing balances have been correctly brought forward to the current period or, when appropriate, have been restated; and ◦ (b)
Chapter 14 Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment McGraw-Hill/Irwin Copyright.
Chapter 13 Property, Plant, and Equipment: Depreciation and Depletion
Property, Plant, and Equipment: Depreciation and Depletion Chapter 13.
Property, Plant & Equipment Prepared by Kent Wilson
THE INSTITUTE OF CHARTERED ACCOUNTANTS OF SRI LANKA
Property, plant and equipment (PPE). RMIT University-Financial Services Group Updates: From Fixed Assets to Property, Plant and Equipment (PPE), consistence.
New NSF Awardee Checklist Requirements: WHY? November 19, 2014 joyce y. JOHNSON POST-AWARDS COORDINATOR OFFICE OF SPONSORED PROGRAMS.
McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights Reserved. 1-1 McGraw-Hill/Irwin © 2008 The McGraw-Hill Companies, Inc., All Rights.
SPECIAL EDUCATION MAINTENANCE OF EFFORT (MOE). MOE REQUIREMENT Federal law requires that each local education agency (LEA) receiving federal funds pursuant.
Brette Kaplan, Esq. Erin Auerbach, Esq. Brustein & Manasevit, PLLC Spring Forum 2013
Webinar for FY 2011 i3 Grantees February 9, 2012 Fiscal Oversight of i3 Grants Erin McHughJames Evans, CPA, CGFM, CGMA Office of Innovation and Improvement.
1 Module 6, Part 3: PPE (Property, Plant and Equipment) 1. Costs to Capitalize 2. Depreciation 3. Asset Sale or Impairment 4. Disclosure 5. Ratios.
Balance Sheet Usefulness of Balance Sheet –Liquidity –Financial flexibility Limitations of Balance Sheet –Values are not current value –Estimates are used.
PUBLIC SCHOOLS OF NORTH CAROLINA STATE BOARD OF EDUCATION DEPARTMENT OF PUBLIC INSTRUCTION Fiscal Components of Monitoring Stephanie English, Chief Monitoring.
1 Chapter 6: Reporting & Analyzing Operating Assets Part 3: Property, Plant & Equipment.
1 Chapter 3: The Measurement Fundamentals of Financial Accounting.
How to Get Rid of Your Auditor Faster Auditor of Public Accounts October 31, 2012.
Office of the Associate Vice President for Finance The Office of the Comptroller Capital Asset Management May 10, 2016 Presentation’s Link
Linking Assertions and Evidence Essential elements of Chapters 6 and 7 combined.
Copyright ©2013 Pearson Education, Inc. publishing as Prentice Hall11-* Introduction to Governmental and Not-for-Profit Accounting, 7e Chapter 11: Federal.
Auditing & Investigations II
Chapter 8 Acquisition and Expenditure Cycle
Property, plant and Equipments
Chapter 14 Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment Copyright © 2014 McGraw-Hill.
BASIC AUDITING CONCEPTS: MATERIALITY, RISK ASSESSMENT, AND EVIDENCE
Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts Chapter 19.
Updating Capital Asset Records
Wide Area Workflow (WAWF) Overview
CAS 300 – Planning an audit of financial statements
Acquisition and Expenditure Cycle
Certified Public Accountants and Consultants
Kentucky County Treasurer’s Fundamentals Course
Managing Federal grants
Fiscal Compliance for Title III
Fiscal Regional Training
Audit Process and File Presentation
Capital Assets Through the Eyes of an Auditor
Property, Plants and Equipment
Topics.
Presentation transcript:

CFO Auditing Standards in the 21 st Century By James P. Kearney Performance Management Consulting, Inc. 27 July 2005

Questions for This Group How many of You are Accountants? How many of You participate in the preparation of the Financial Statements of your Entities? How many of You are in Entities with a significant amount of Plant, Property & Equipment (PP&E)? (One Billion or more) How many of You have positions that affect Your Entity’s PP&E in some significant way? How many of You feel that this CFO Audit stuff is mainly an Accounting thing?

Audit of Balance Sheet Plant, Property & Equipment (PP&E) Each of the CFO Federal Entities has to prepare at least Annual Financial Statements The Balance Sheet audit requires the Entity to make five (5) Assertions regarding PP&E: Valuation Ownership Completeness Existence Presentation/Disclosure

Assumptions Regarding Your Entity’s Capitalized PP&E I am assuming that Your Entity has: –An approved Capitalization Threshold –Supportable Useful Lives for each type of Asset (General Personal Property, Aircraft, Vessels, Buildings/Structures, Software, Vehicles, Electronic Systems, etc.) –Acceptance criteria for when an asset is Placed In Service (Constructed Assets)/ Beneficial Occupancy (Buildings), Title passes (Delivered Assets)

Audit of Valuation This audit process focuses on the Value of Your Capitalized Assets and how you document this Value for New assets and Improvements to Existing assets? –How do you document your Direct Costs Contracts (Invoices, DD 250’s, Contractor’s Release) Labor (Do you have a labor distribution System?) Transportation (Are these funded centrally?) Survey & Design (Are these by Asset?) Direct cost of Inspection & Supervision Handling & Storage costs (Centrally funded?)

Audit of Valuation (cont.) –How do you document your Indirect Costs Program Management (Invoices, DD 250’s, Contractor’s Release) Systems, Integration and Testing –How are these allocated to the Direct costs? »Based on Obligations, Expenditures? »Are Undelivered Orders included; who tells accounting that the UDOs are valid? »Are all Indirect costs allocated each year or are some carried forward to future deliveries? »Is the Allocation Methodology tested? »Do you allocate indirect cost to Assets that are expensed?

Audit of Valuation (cont.) –Auditors typically test Valuation through statistical samples. For example, if Auditors are testing the Value of an Entity’s Buildings they will: Gain an understanding of the processes, policies and methodologies associated with how the Entity buys, builds and/or improves its buildings and allocates indirect costs. Ask the Entity for their entire population of Buildings Tie the value of these Buildings to the General Ledger Take a statistically valid sample of the building population Ask the Entity to provide the supporting documentation (Invoices, DD-250s, Transfer Documents, Indirect Costing Methodologies, etc.) for the sample items Plug their results into their statistical module and determine if the Entities values fall within the Auditor’s expected range.

Audit of Ownership This audit process focuses on the documentation you have to support your assertion that the asset is yours –Most Assets; You Paid for it, You Own it; BUT: If Land; do you have Title documents? If Buildings or Constructed assets; do you have Contractor’s Release or other transfer document? –If you have made Improvements or Built a Building on another Entity’s Property do you Own it or is it a Leasehold Improvement? –Auditors can test ownership via attribute sampling; can you produce documentation that you own it or not.

Audit of Completeness This audit process focuses on how an Entity knows that all owned assets are being reported. –How often are inventories of Your Assets conducted? –Who certifies that the Assets have not been disposed of? –Who updates the Asset’s inventory record upon acquisition or disposal of assets? Auditors test Completeness via “floor to book and book to floor” and reviewing Expenditure data. Does your Entity do any Testing of Assets?

Audit of Existence This audit process focuses on “touching” and “seeing” assets. –Often done in conjunction with Completeness testing Auditors often test via attribute testing; can you produce the asset for visual inspection? –How does you Entity support testing of: »Software »Electronic Systems »Operational Assets that move around

Audit of Presentation Presentation focuses on the information put onto the Financial Statements. Clearly this is all Accounting stuff? Not exactly; there are allot of Disclosure requirements in footnotes about which Accountants don’t know anything. –How does the Entity determine if its PP&E is Impaired? –How does the Entity determine if its PP&E has Deferred Maintenance? Auditors test this by reviewing Entity reports and information (Flag meeting minutes, Budget and Supplemental Requests, even Newspapers)

Bottom Line CFO Audits are a Group Effort. If an Entity is going to be successful all parts of the organization must be involved: –Need the Programs who order and/or operation the PP&E –Need the Contracting Officers who procure the PP&E –Need the Property Managers who write the policies and procedures regarding PP&E –Need the Accountants who record and report the PP&E –Need the Custodians who inventory and know the status of the PP&E

QUESTIONS Are there any questions?