2. CPO UNIVERSITY  High Technology Tax Deferral  Audits  CPO Accounting Process Update Presents

3. CPO September 15, 2011 High Technology Tax Deferral

4. Overview State tax incentive allowing deferral of sales tax on certain costs Building or location must be used for qualifying research Qualifying research Advanced computing, Advanced materials, Biotechnology, Electronic device technology, Environmental technology

5. Overview Application MUST be submitted before issuance of the building permits for the project Generally only projects with qualifying costs exceeding $1M will be considered Tax deferral becomes permanent after 8 years

6. Roles and Responsibilities Financial Accounting Project Manager Capital Projects Schools (Client) Funding Agent

7. Risks and challenges Challenge to UW assumptions during audit reducing qualifying space Usage changes from qualifying to non- qualifying Refund process Annual Survey

8. Examples of Qualifying Projects Primate Center Health Sciences Health Sciences Center H-Wing Health Sciences Center I-Wing Bagley Hall/Photonics MRI Replacement – Health Sciences Center Ben Hall Genome Sciences Building

9. Questions? Tax Office -Julia Shanahan Telephone: 206-616-3003 E-mail: jeshana@u.washington.edujeshana@u.washington.edu

10. Financial Audits – an Overview What is a financial audit? Who audits CPO? What are the types of audits? What are the auditors looking for? When are audits performed? What is the audit process? How can CPO staff assist with the audits?

11. What is a Financial Audit? In general, a review of financial documents or statements to determine their accuracy. It may be a review to determine if the UW Financial Statements are fairly stated in accordance with GAAP (generally accepted accounting principals) or a review of one specific project or item.

12. Some Entities that Audit CPO: Public Accounting Firms (such as KPMG) UW Internal Audit Washington State Department of Revenue FEMA Washington State Auditor’s Office

13. Some Types of Audits Audits related to the UW or UW self- sustaining entity Financial Statements Audits of an individual project with FEMA or other specific funding Audits of an individual project applying for High Tech Sales Tax Deferral Audits of a specific item, such as change orders

14. What are the auditors looking for? It varies depending on the type of audit - each audit is unique. When there is a large volume of transactions usually the auditors will test a sample of transactions.

15. What can CPO staff do to help the audits go smoothly? Follow established procedures for review and approval, and make sure that signatures are legible. Be aware of special requirements for specific projects and make sure they are followed. Maintain all required documentation, and file documents properly. Respond to requests when additional information is needed for audited items.

16. Workflow Invoice Receipts & Payments Set up Budget Funding Purchase orders Set up Budget Funding Purchase orders Project Assignment (Tracker) CPOA Staff Project Assignment (Tracker) CPOA Staff Project Completion P.O.’s liquidation Close out Project Completion P.O.’s liquidation Close out

17. Process Updates I. Set ups and Adjustment Budgets/ Funding Transfer Purchase Orders/ Change Orders/ Additional Services II. Payments & Billing Invoices/ Procards/ Eprocurement Cost Transfer (CTI) & Internal Sales Document (ISD) Journal Voucher (JV’s) CPO fees Billing (internal/ external) III.Liquidation and Closeout P.O.’s liquidation Reconciliation (P.O.’s/ Project) Returning Funds Balance & Budget Closeout

18. Special tasks/ Matrix/ Storage/ Retrieval: Jaime & Kiki(Students) Budget set up & closing/ Funding Information: Vina Lorenzo Purchase Orders/ Invoices/ Reconciliation: Gilda Franada/ Kazuko Stoesz/ Ann Cronin CPO Billings (Internal/ External/ Special Projects): Leslie Holmes Staff: CPO Accounting email address: cpoactng@uw.edu

19. Q & A