1. Get Ready for the 2018-2019 Audit
Kathryn Perry, CPA
Jump, Perry and Company, LLP

2. Due Dates and Uploads 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
Uploads:
CAFR -AMR -Cover Letter
Peer Review -DCF -CAP
Resolution -COI

3. CAFR Comprehensive Annual Financial Report CAFR sections:
Introductory Section
Financial Section
Statistical Section
Single Audit Section

4. Why a CAFR?
The minimum GAAP requirements are MD&A, Basic Financial Statements and Required Supplementary Information
Broader presentation of GAAP financial statements
Gives a spirit of transparency and full disclosure
Provides additional information for credit rating agencies

5. Introductory Section List of Principal Officials Letter of Transmittal
Organizational Chart
IASBO COE

6. Transmittal Letter
Official communication of your government and serves to convey the financial report
Cannot be dated any earlier then the audited financial statements
Introduce the reader to the BOE
Addressed to “The Board and Citizens”
Must include
Management’s responsibility for the financial information

7. Transmittal Letter Internal control structure Independent audit
Refer to MD&A, but do not duplicate information or that in the Notes
Profile of the school district
Information useful to assessing the economic condition of the school district

8. Financial Section Independent Auditor’s Report
Management Discussion and Analysis
Basic Financial Statements
Required Supplementary Information
Combining and individual fund presentations and supplementary information

9. Financial Section Independent Auditor’s Report
Management Discussion and Analysis
Describe the basic government-wide financial statements
Provide condensed financial data-current year and preceding year
Provide an analysis of the school districts overall financial position
Discussion of capital assets and long-term debt
Has to agree with the financial statements

10. Financial Section Basic financial statements
District-wide financial statements-A’s
Fund financial statements-B’s
Governmental Funds
Proprietary Funds
Fiduciary Funds
Notes to the Financial Statements
Required Supplementary Information
C through I

11. Statistical Section Financial Trends-feeds from auditor financial data
Revenue, Debt, Demographics and Economy and Operating Information
Unaudited
To be provided to the auditor

12. Single Audit Section Opinions on Internal Control and Grant Compliance
Schedule of Federal Awards(SEFA) and Schedule of State Awards (SESA)
Notes, Findings and Prior Findings

13. SEFA & SESA
All Federal and State Grants need to be included on schedules
All grants need Grant numbers
Need to provide grant documents
Major programs are determined from the SEFA and SESA
Totals by Fund need to tie to SEFA and SESA including Accounts Receivable and Deferred Revenue

14. Single Audit Federal Requirements Single Audit/Uniform Guidance
If cumulative federal 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

15. 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

16. Grants Major Program Specific Grant Testing
Testing is based on Grant Compliance Supplement
Testing of internal control over grant compliance

17. Other DOE Audits Findings from DOE audits
Inform auditor of any findings
Auditor has to review Corrective Action Plan
Report on findings in current year CAFR

18. Auditor’s Management Report
Specific DOE testing not normally part of a GAAS audit
Surety bonds
Secretary Reports/Treasurer Reports
Bids/over bid threshold
Food service
Student activities
ASSA
Transportation

19. Auditor’s Management Report
Tuition charges
Payroll sign-offs
Employee position control roster
Encumbrances
Travel
TPAF reimbursement
Testing for lead of all drinking water

20. ASSA & DRTRS ASSA Testing can be done in November
Depending on size of District this can be very time consuming
Need to keep all of the records/backup used to calculate the student count
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

21. Audsum Auditor inputs based on final CAFR balances
The detail by school entered by BA (new for )
BA needs to review auditor input
Audsum creates the base information for the next years budget
Needs to be certified by due date

22. 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

23. Reports to have ready Ex-Aid and Non public aid Grant reports from DOE
Compensated Absences schedule
New Leases
List of Bids
Vendors above bid threshold

24. Year End Review Board Secretary’s report Cash
All bank reconciliations need to be prepared and free of unrecorded adjustments
Old/stale checks should be researched and cleared up
Total cash in all funds should reconcile to Treasurer’s report which should tie to bank reconciliations

25. Year End Accounts Receivable
Account balance should tie to State Aid Payments Schedule
Any deductions need to be recorded
Fund 20
Most grants need to have the costs incurred before the grant can be drawn down
Fund 30
Any SDA grants need to be recorded when reimbursement requested
Both funds generally “borrow” from Fund 10

26. Year End Accounts Payable/Encumbrances
Encumbrances 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
Fund balance section generally do not reflect all restricted amounts
No over expended line items

27. Fund Balances Must tie to the prior year ending in total
Were there entries made against FB during the year?

28. IS FUND BALANCE ROLLING

29. Reserved Fund Balances
Must have resolution in June Board Meeting to put money into reserves
Types of reserves available
Tuition Reserves
Maintenance Reserve
Capital Reserve
Emergency Reserve
Waiver Offset Reserve
Legally restricted – in budget for next year
Excess Surplus
Debt Service Reserve
Have until June 30th to set up

30. Reserves Tuition reserve Maintenance Reserve
Must have a tuition contract with another LEA
Must provide the contract to the auditor
2 years 10% max of contract per year
If used in budget-it is taken out of reserve and must recalculate the 2 years based on Resolution
Maintenance Reserve
Need Maintenance plan
max no more than 4% of the replacement cost of buildings

31. Reserves Emergency reserve $250,000 or 1% of budget up to $1 million
Need Commissioner approval for withdrawal
Need to prove it is an emergency
Can be budgeted for use for excessive health care costs or security improvements

32. Reserves 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

33. Excess Surplus How to calculate What Aid is excluded from calculation
If you do not have a resolution to add money to the other reserves and excess surplus calculates-there is nothing the auditor can do

34. EXCESS SURPLUS CALCULATION

35. The NJ Audit Program Always read the “Significant Changes” page
FYI-The audit program can answer many BOE questions they ask the auditor

36. 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

37. Section 1-General Compliance
Treasurer
Not required
Board Secretary takes over roles of Treasurer
A Board Designee prepares the bank reconciliation
Fund Checklists

38. 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

39. 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

40. 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

41. 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?

42. 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

43. 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
Reserve interest needs to be segregated
District Taxes
Auditor will confirm with town

44. 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

45. 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
W-2’s and W-3’s
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

46. 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
Sale and lease-back contracts

47. 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

48. 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

49. 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

50. 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

51. 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
Net Cash Resource Schedule
Schedule of Meal Count Activity

52. 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

53. 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

54. 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

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

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

57. 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

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