Preparing for the Audit Presented by Patty McClendon Senior Manager – KPMG LLP KPMG LLP

May 2007 GAAP Reporting Workshop 2 Overview – Proper Care and Feeding of the Audit Process Role of the auditor Role of the campus Planning and lots of communication Campus preparedness – having all required items ready on first day of fieldwork! Directly impacts the ability to stay “on track” with required audit timeline and CO submission deadlines

May 2007 GAAP Reporting Workshop 3 The Role of the Independent Auditor Provide PBC List (contained in Chapter 9) Financial statement audit A-133 audit (higher and limited scope) KPMG campus partners to communicate campus audit preparedness to Chancellor’s Office (CO) on first day of fieldwork Planning meeting/entrance conference held All PBC schedules provided Completed and approved reporting package provided to KPMG campus team

May 2007 GAAP Reporting Workshop 4 The Role of the Independent Auditor, continued Communicate progress and any difficulties or issues encountered during the audit, including proposed management letter comments and single audit findings, to: Campus management CO via weekly CO meetings with campus partners KPMG Systemwide Team via weekly progress reports Meet deadlines set by CO, campus and audit team (refer to audit timeline for key dates)

May 2007 GAAP Reporting Workshop 5 Understanding the Role of the Campus To have all requested schedules, including the completed and approved reporting package, PRIOR to the first day of fieldwork (refer to Engagement Team Phone List for fieldwork start dates) Provide suitable workspace, including phone and internet connections Designate campus contacts for financial statement and A-133 audits Meet deadlines set by CO, campus and audit team (refer to Audit Timeline for key dates)

May 2007 GAAP Reporting Workshop 6 First Day of Fieldwork – Submission to KPMG Campus Team All PBC schedules – to be provided in a separate set of PBC binders with indexing of all schedules (refer to Chapter 9) Completed and approved reporting package Campus analytical review (fluctuation analysis) by financial statement line item (part of reporting package)

May 2007 GAAP Reporting Workshop 7 Key Deadlines – Submission to CO Auxiliary organizations’ audited financial statements, including supplementary information schedules – September 28, 2007 Campus reporting package (includes financial statement and A-133 audits, including FISAP) – October 18, 2007 Campus analytical review (fluctuation analysis) by financial statement line item – October 18, 2007 A-133 findings – November 7, 2007 Campus draft stand-alone financial statements (including management approved MD&A) to KPMG for review – November 16, 2007

May 2007 GAAP Reporting Workshop 8 Planning Meeting/Entrance Conference Campus and KPMG team introductions Current year activity and issues Scope of audit PBC list clarification Confirmations Key deadlines Auxiliary organizations Reporting package Management’s discussion and analysis Stand-alone financial statements Confirm fieldwork timing

May 2007 GAAP Reporting Workshop 9 Sample Schedules

May 2007 GAAP Reporting Workshop 10 KPMG Information Risk Management (IRM) Audit Team – Scope of Work IT General Controls Review ERP review Access controls Configuration controls Financial aid system controls at selected campuses (7 higher scope A-133 campuses) Department of Education upload to campus Student Information System (PeopleSoft or Legacy) Grade system – user access Interface from grade system to financial aid system (if applicable)

May 2007 GAAP Reporting Workshop 11 IRM Test Work – Key Dates April 27, 2007 – Campus IT PBC list and questionnaires sent to campuses May 11, 2007 – Campus PBC and questionnaires due to KPMG May - July, 2007 – Campus IT general controls test work and specific business process controls test work Entails some on-site campus visits (7 campuses plus the CO), while for the remaining campuses the work will be conducted via phone interviews and requested documents. UNISYS Data Center review (June 4 – 6, 2007) Project wrap up / Campus close out meetings (TBD ~ July)

May 2007 GAAP Reporting Workshop 12 Questions