1. May 19 th, 2016 OTHER REMINDERS Su Chen, Financial Reporting Analyst, SFSR Chancellor’s Office

2. Learning Objectives Elimination of non-exchange transaction Updates on IPEDS Template used for Component Units’ FIRMS data submission General information related to IT General Controls Audit Peer Review document related to external audit firm Qualifications Review Questionnaire Information needs to be provided to SFSR when a Component Unit is formed or dissolved MAY 2016YEAR-END GAAP TRAINING 2

3. Other Reminders: Elimination of Non-exchange Transactions with Campus Non-exchange transaction In a nonexchange transaction, the party gives (or receives) value without directly receiving (or giving) equal value in return. For CSU, common types of nonexchange transactions may include:  Scholarship contributions  Donations and other contributions  Financial aid grants  Gifts  In-kind gift contributions MAY 2016 YEAR-END GAAP TRAINING 3

4. Nonexchange transactions between the campus and its discretely presented component units should be eliminated in the consolidated SRECNP. Example: XXX Foundation donated equipment to the campus. MAY 2016 YEAR-END GAAP TRAINING 4 Campus Dr. Capital Assets, net Cr. Grants & Gifts, Capital Component Unit Dr. Auxiliary Enterprise Expense Cr. Capital Assets, net Other Reminders : Elimination of Non-exchange Transactions with Campus (cont.)

5. MAY 2016 YEAR-END GAAP TRAINING 5 TM1 Input Sheet - Campus SRECNPTM1 Input Sheet - Foundation SRECNP Other Reminders: Elimination of Non-exchange Transactions with Campus (cont.)

6. Communication between campus and its component units To verify that all nonexchange transactions have in fact been captured; To confirm how the related transactions were recorded in the component unit’s audited financial statements. Campus Input - TM1 Note 16 Disclosure Require collaboration between campus and component units MAY 2016 YEAR-END GAAP TRAINING 6 Note 16.1 - Between the campus and the related discretely presented component unit Note 16.2 - Between the discretely presented component units Note 16.3 - Between the campus A and campus B’s discretely presented component units NEW

7. Other Reminders: Elimination of Non-exchange Transactions with Campus (cont.) MAY 2016 YEAR-END GAAP TRAINING 7 SRECNP Line DescriptionAmount Grants and gifts, capital$XXX Auxiliary enterprise expenses – XXX Foundation. - FASB$XXX To eliminate the capital asset donation from Foundation. TM1-Note 16 TM1-Note 16 Proper Entry Format

8. Other Reminders: Elimination of Non-exchange Transactions with Campus (cont.) GAAP Manual - Chapter 4.6.1 Elimination Covers the different types and levels of eliminations of interfund activities (inter-agency and intra-agency) and nonexchange transactions between Campus/CO and Discretely Presented Component Units. For discretely presented component units, the only applicable elimination is related to non-exchange transactions. MAY 2016 YEAR-END GAAP TRAINING 8 Please email us your comments and suggestions SFSR_GAAP@calstate.edu

9. Other Reminders: IPEDS Template Updates MAY 2016 YEAR-END GAAP TRAINING 9 Template update: GAAP Account 711208-Other Assets Updated 2016 Template 2015 Template

10. Other Reminders: IT General Controls Audit CSU uses PeopleSoft - Common Financial System (CFS). It is a centrally-managed finance system hosted by the Chancellor’s Office. Currently, 22 campuses, the CO and some component units have converted to CFS. San Diego campus and other component units are manages their own finance system. As part of the California State University (CSU) financial statements audit, KPMG performs general and application controls testing over the Common Financial System (CFS). No separate audit report is issued on the effectiveness of the IT General and Application Controls in CFS. MAY 2016 YEAR-END GAAP TRAINING 10

11. Other Reminders: IT General Controls Audit (cont.) There is a dedicated chapter in the GAAP Accounting and Reporting Manual that focuses on the IT Audit, see Chapter 17. It covers the following topics: a) Scope of the IT Audit b) List of the covered areas for IT General Controls and IT Application Controls c) Timing d) PBC List e) Prior Year Deficiencies and Root Cause The Chancellor’s Office communicates to the campus GAAP coordinators if there are any material weaknesses and/or significant deficiencies identified in the current year audit. MAY 2016 YEAR-END GAAP TRAINING 11

12. Other Reminders: IT General Controls Audit (cont.) If external auditors of component units using CFS need more information to facilitate their audits, please email the request to SFSR_GAAP@calstate.edu. SFSR GAAP team will coordinate with the IT department in completing the request.SFSR_GAAP@calstate.edu GAAP Accounting and Reporting Manual can be accessed using this link http://www.calstate.edu/SFSR/GAAP/2015- 2016/GAAPManual/index.shtml http://www.calstate.edu/SFSR/GAAP/2015- 2016/GAAPManual/index.shtml MAY 2016 YEAR-END GAAP TRAINING 12

13. Other Reminders: Peer Review Auxiliary Organization External Auditor Firms Qualifications ICSUAM Portal https://csyou.calstate.edu/Policies/icsuam/Pages/default. aspx https://csyou.calstate.edu/Policies/icsuam/Pages/default. aspx Approved External Auditor Firms http://www.calstate.edu/sfsr/gaap/Approved_Audit_Firms_FY14- 15.pdf MAY 2016 YEAR-END GAAP TRAINING 13 ICSUAM Policy Number: 13175.00 Peer Review – The audit firm should demonstrate that it has completed a Peer Review in the most recent three years, receiving an unqualified opinion on the review. The audit firm is required to provide a copy of the Peer Review report for assessment of the results of the examination.

14. Other Reminders: New or Dissolved Component Units MAY 2016 YEAR-END GAAP TRAINING 14 Campus must inform SFSR if there are: A. Newly formed component unit(s) i. Brief description of the component unit(s) ii. Submit GASB No. 61 questionnaire (blended vs. discrete) iii. Submit Auxiliary External Auditor Qualification Questionnaire iv. Contact person(s) to be included in email listserv B. Dissolved component unit(s) i. Timing and reason for the dissolution ii. Last fiscal year to be audited The information will be used to update the YES (TM1) structure, disclosures and tracking of stand-alone audits.

15. Which of the following is a non-exchange transaction? A. Research Foundation (discretely presented component unit) pays the University for the costs to conduct a research project. B. Discretely presented component unit provides funding to the campus to fund student scholarships. The students are not required to repay the scholarships. C. Discretely presented component unit enters into an agreement with campus detailing construction inspection services to be performed by the campus and the amount to be paid by the component unit for the services. MAY 2016 YEAR-END GAAP TRAINING 15 Knowledge Check Question

16. Answer: B. Discretely presented component unit provides funding to the campus to fund student scholarships. The students are not required to repay the scholarships. MAY 2016 YEAR-END GAAP TRAINING 16 Knowledge Check Question