1. Washburn center for children
Maria
Thanks for having us, we are excited about the opportunity
We have prepared materials, but welcome this to be conversational
Ask questions throughout
Washburn center for children
Proposed Audit Approach – December 31, 2017
February 22, 2018

2. Agenda
Service Team Engagement Scope Audit Objectives Audit Engagement Timeline Planned Audit Approach Required Communications Nonprofit Accounting Standards Update

3. Service Team Maria Schwingler, Audit Partner
Tyler Bernier, Quality Review Audit Partner
Kim Hunwardsen, Tax Partner
Deb Nelson, Tax Senior Manager

4. Engagement Scope
Audit of the consolidated financial statements as of and for the year ended December 31, 2017
Preparation of federal and state information returns for the year ended December 31, 2017

5. Audit Objectives
Complete audit procedures to enable us to issue an opinion on the consolidated financial statements taken as a whole.
Conducted in accordance with auditing standards generally accepted in the United States (U.S. GAAS).
Plan and perform audit to obtain reasonable, not absolute, assurance about whether the consolidated financial statements are free of material misstatement.

6. Audit Objectives
Consolidated financial statement audit procedures will:
Include examining, on a test basis, evidence supporting amounts and disclosures
Obtain an understanding of internal controls, but no assurance on the controls
Assess quality of accounting principles and significant estimates

7. 2017 Audit Engagement Timeline
November: Initial planning discussions with management
November - February: Audit planning
February 22: Finance Committee planning meeting
January 18: On site pre-audit
February 26 – March 2: On site audit fieldwork
April 6: Final draft statements and letters due to management
April 19: Reporting to Finance Committee/Issue final audit report

8. Planned Audit Approach
Planning and Pre-Audit
Business changes and environment, including risk assessment
Communication of expectations and document requests
Discussions with Finance Committee and management
Preliminary analytic review
Internal control understanding
New or significant transactions
Establish materiality
Develop audit plan and testing procedures
Consideration of group audit standards

9. Planned Audit Approach
Fieldwork
Risk-based approach
Test account balances
Review and test estimates
Final analytical procedures
Review audit documentation and financial statements
Reporting
Meet with Finance Committee
Items to be included in formal written communication
Ongoing
Year-round access to auditors

10. Planned Audit Approach
Washburn Center for Children preliminary risks assessed:
Overall Risks:
Significant risks by audit area:
Management override of controls
Support receivables and receipts
Intercompany transactions
Revenue recognition, proper valuation
Debt covenants
Program service fees receivables and receipts
Net assets – Investments - Endowment
Proper release from restriction, classification of net assets
Long-term debt and leases
Completeness of debt and leases, including related disclosures
Other Items:
Accounting for solar panels installed in December 2017
Pay-off of bridge loan in 2017
Changes in financial management in 2017

11. Required Communications
Consolidated Financial Statement Audit
Our responsibility under U.S. GAAS
Our audit does not relieve management of responsibilities
Planned scope and timing of the audit
Obtain understanding of entity and environment
Assess risks of material misstatement and design audit procedures
Will communicate any significant difficulties encountered
Will communicate significant financial statement and internal control related findings at the conclusion of the audit
Engagement Letters
Provided to management

12. Nonprofit Accounting Standard Update
FASB Issuance of ASU – Presentation of Financial Statements for Non-Profit Entities
Two net asset categories
Implied time restrictions no longer allowed – will require restatement
Enhanced disclosures on underwater endowments
Enhanced disclosures on board designated net assets
Disclosures regarding liquidity
Qualitative and quantitative requirements
Net investment return presentation
Presentation of expenses by both function and nature
Optional direct method Statement of Cash Flow simplification
Effective for fiscal years beginning after December 15, 2017 (effective for Washburn Center for Children for 12/31/2018 year end)
Early adoption is permitted

13. Nonprofit Accounting Standard Update
FASB Issuance of ASU – Revenue from Contracts with Customers
Contributions are excluded from the standard
Transactions that include elements of both a contribution and exchange transaction
Government grants
Effective for fiscal years beginning after December 15, 2018 (effective for Washburn Center for Children for 12/31/2019 year end)
FASB Issuance of ASU – Leases
All leases to be recognized as capital leases
Final rules issued February 25
Effective for fiscal years beginning after December 15, 2019 (effective for Washburn Center for Children for 12/31/2020 year end)

14. Questions?