1. Audit and CAFR Presentation
Kathryn Perry, CPA
Partner
Jump, Perry and Company, LLP

2. It Isn’t Just a CAFR... CAFR AMR AUDSUM Single Audit Summary
Data Collection Form
Board Resolution and Corrective Action Plan

3. It Isn’t Just a CAFR anymore..
Synopsis
Audit Firm’s Peer Review

4. District uploads Homeroom/Repository Cover Letter from CPA PDF CAFR
PDF AMR
Excel Single Audit Summary
PDF Synopsis with CAP and Resolution
Peer Review
Certifying AUDSUM
Data Collection Form

5. Filing Requirements Due December 5th every year
Data Collection Form due within 30 days of audit submission
Board resolution must be from a Board meeting within 30 days of audit submission

6. Things BAs Need to Do
Schedule dates with the auditor when your team will be available
Write Transmittal letter, put on letterhead and get signed
Discuss possible findings during course of audit
Discuss Reserves

7. Things BAs Need to Do Review MD&A Review CAFR/AMR Review Audsum
Will roll into your budget
Answer Audit Questionnaire
Be available to upload into Homeroom

8. ESTIMATING YEAR END FB Revenues 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
Total expenditures
66,000,000
Excess of Rev over Exp
1,007,500
2% of expenditures
1,320,000

9. ESTIMATING YEAR END FB Prior 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

10. The Auditor is coming

11. Reports to have ready Secretary’s Report Balance Sheet by fund
Annual activity for balance sheet accounts
Revenue report by fund
Expenditure report by fund – grouped by object
FICA reports from DOE
Current year and next year budget
State Aid Summary

12. Reports to have ready Ex-Aid and Non public aid Grant reports from DOE
Compensated Absences schedule
New Leases

13. Board Secretary Report
Needs to be reviewed-look at the balances-does it make sense?
Cash-all cash on Treasurers report needs to be included in the BSR and tie monthly
If cash transfers occur they need to be made timely and be reflected on the BSR
The Accounts Receivable balance needs to reflect actual

14. Board Secretary Report
Fund balance section generally doesn’t reflect all restricted amounts
Need to confirm where lease payments are posted, new equipment items posted and if Super or BA salaries are charged to other line items
E-cert/reconciliation top W-2
No overexpended line items

15. 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

16. 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.

17. 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

18. IS FUND BALANCE ROLLING

19. 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

20. 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

21. Excess Surplus How to calculate
What Aids are excluded from calculation

22. EXCESS SURPLUS CALCULATION

23. Encumbrances How are they audited Need to make sense
Next fiscal year expenditures should not be included
Auditors do not want to get into a discussion about whether it belongs in encumbrance or not

24. Auditor Opinions/Reports
Opinion on audited financials
Opinion on internal controls
Opinion on compliance with grant requirements

25. The NJ Audit Program The 2016-2017 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

26. Section 1-General Compliance
Appointment of Auditor/required audit steps
Risk Assessment
Internal control testing
Fraud analysis
Minutes and resolutions
The auditor reads all minutes
Look for bids, required policies, unusual discussions

27. Section 1-General Compliance
Treasurer
Not required
Board Secretary takes over roles of Treasurer
A Board Designee prepares the bank reconciliation
Surety bond on Board Secretary
Enough Coverage?

28. Section 1-General Compliance
ASSA, DRTRS and SEMI
ASSA 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, transportation contracts, free & reduced lunch applications, and ESL/LEP info

29. Section 1-General Compliance
Budgets and Transfers
Transfers should be in minutes
Any County Superintendent approvals should be provided
Transfers to Reserves-Very Important!!
Interfund Balances must cancel out
CAFR footnote needs to disclose why the interfund

30. Section 1-General Compliance
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/Consortiums
Required review of open purchase orders at year end-Encumbrance Testing
w/o QPA $29,000 w/QPA $40,000

31. Section 1-General Compliance
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

32. Section 1-General Compliance
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 from PY?

33. Section 2-Specific Compliance
Fund 10
Board Secretary and Treasurers Report
Auditor will tie each month out/AMR finding
Bank reconciliations
Not all cash accounts on Cash Report
They all need to be reconciled monthly
Petty Cash
Need to re-establish July 1

34. Section 2-Specific Compliance
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

35. Section 2-Specific Compliance
Tuition
Have available your DOE certified rates
Can only have reserve for and
On-behalf FICA
Obtain schedule from DOE with all reimbursements. Will assist in determining Accts Rec at year end

36. Section 2-Specific Compliance
Compensation Reporting
All 1099’s were filed
All required payrolls were certified/signed off
Get completed W-9’s for all vendors
Pensionable Wages
Auditor will test pension reports
Reviewed as part of payroll testing
Employee Contribution for Health Benefits
Calculated on base wages/paid monthly to insurance company
Provide info on procedures
Have a written cafeteria plan

37. Section 2-Specific Compliance
Refunds, e-rate, Cancellations
Current year cancellations go against expenditure
Prior year are Misc Income
Travel Expenditures
Tested/Must have Policy
Health Insurance
Rules on self-insured
Sale and lease-back contracts

38. Section 2-Specific Compliance
Required Maintenance
Must spend 2% of replacement cost of new facility
Required schedule in J’s
Reserves
Capital reserve, Maint Res, Tuition Res, Emergency Res schedule in CAFR notes
Rules for use
Excess Surplus
2% of expenditures/minimum $250,000

39. Section 2-Specific Compliance
Fund 20
What goes in Fund 20?
Grants should have budgets
Teachers salaries charged should relate to grant
A grant cannot have Accts Rec and Def Rev
TPAF and FICA reimbursement not allowed on Fed grants
Calculation, form and payment made to NJ by October 1

40. Section 2-Specific Compliance
Fund 30
Bonds and Grants
Purpose of Capital Project
Interest earned on bond proceeds
Arbitrage calculation
Unexpended bond proceeds
Capitalization of Assets

41. Section 2-Specific Compliance
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
Bond refunding-needs to be accounted for properly

42. Section 2-Specific Compliance
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
SSAE16
3 Months of Cash schedule

43. Section 2-Specific Compliance
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

44. Section 2-Specific Compliance
Fund 90-Agency Funds
Payroll
Payroll Taxes
Unemployment
Student Activities
Other Groups working in the District
Are they registered/501c3’s

45. Section 2-Specific Compliance
Capital Assets
Capitalization level of $2,000
Depreciation Schedules-lives-methods
Using an outside agency for depreciation
How capital assets flow from B-2 to A-2 in CAFR
How footnote should be prepared

46. Section 2-Specific Compliance
Long-Term Liabilities
Compensated absences
Early retirement incentive programs (ERIP)
Bonds
Footnote requirements

47. Single Audit Federal Requirements Single Audit/Uniform Guidance
If grant expenditures exceed $750,000 then a single audit must be performed
Low-risk Auditee-why you want to be one
What is a major program?
Grant of $750,000 or 3% of award if in excess of $25 - $100 million

48. Single Audit Major program audit requirements
Must be audited once out of a 3 year period
Single Audit Summary
Schedule of Fed and State awards
Data Collection Form and filing
Findings
Corrective Action Plan

49. Section 3-Reporting Audit Submission
Due December 5
Sample reports are in audit program
Sample footnotes
Statistical section-The J’s
Unaudited

50. 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

51. Questions
Feel free to call or me with any questions