Preparing for the Audit Presented by Elisa Stilwell Senior Manager - KPMG LLP KPMG LLP

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

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 Draft financial statements (excluding MD&A) provided to KPMG campus team

GAAP Reporting Workshop 4 The Role of the Independent Auditor (cont’d) 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)

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)

GAAP Reporting Workshop 6 First Day of Fieldwork – Submission to KPMG Campus Team Completed and approved campus preparedness checklist (available on CO website) 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 Draft financial statements (excluding MD&A)

GAAP Reporting Workshop 7 Key Deadlines – Submission to CO Auxiliary organizations’ audited financial statements, including supplementary information schedules – September 30, 2005 Campus reporting package (includes financial statement and A-133 audits, including FISAP and findings, if any) – October 18, 2005 Campus fluctuation analysis by financial statement line item – October 18, 2005 Campus MD&A (reviewed and approved by management and KPMG teams) – October 18, 2005

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

GAAP Reporting Workshop 9 Sample Schedules

GAAP Reporting Workshop A-133 Higher Scope Campuses Bakersfield Dominguez Hills Hayward Humboldt Los Angeles San Bernardino San Diego San Luis Obispo

GAAP Reporting Workshop 11 KPMG Information Risk Management (IRM) Audit Team – Scope of Work Update understanding of the IT environment via scheduled conference calls with campuses and review of selected documentation Data conversion for PeopleSoft baseline implementation at selected campuses ERP review Access controls Configuration controls Financial aid system controls at selected campuses (8 higher scope A-133 campuses) Department of Education upload to campus systems Grade system – user access Interface from grade system to financial aid system

GAAP Reporting Workshop 12 IRM Testwork– Key Dates May 6, 2005 – IRM PBC list distributed to campuses May 19, 2005 – Questions distributed for campus conference calls scheduled beginning May 31, 2005 (approximately 2 hours per campus) May 31 to June 10, 2005 – Conference calls to be held with campuses to discuss applications, networks, configuration changes, and continuity planning / computer operations Drives planning and scoping efforts June 17, 2005 – Submission of all items on PBC list to CO (ERP review covering access controls and configuration controls) Dates to be determined – on-site testwork at selected campuses

GAAP Reporting Workshop 13 Questions?