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Audit and CAFR Presentation. Kathryn Perry, CPA Partner Jump, Scutellaro and Company, LLP. Board Secretary Report. Needs to be reconciled monthly Cash-all cash on Treasurers report needs to be included in the BSR and tie monthly
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Audit and CAFR Presentation Kathryn Perry, CPA Partner Jump, Scutellaro and Company, LLP
Board Secretary Report • Needs to be reconciled monthly • Cash-all cash on Treasurers report needs to be included in the BSR and tie monthly • Restricted cash accounts need to tie out to the reconciliation • If cash transfers occur they need to be made timely and be reflected on the BSR • The Accounts Receivable balance needs to reflect actual
Board Secretary Report • Fund balance section generally doesn’t reflect all restricted amounts • The revenue in Fund 10 generally is recorded at beginning of the year when setting up AR • Expenditures are true month to month • Need to confirm where lease payments are posted, new equipment items posted and if Super or BA salaries are charged to other line items
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
GAAP vs Budgetary • CAFR is prepared in accordance with GAAP • Why is budgetary different • Fund 20 is on budgetary • Fund 30 is budgetary on Sched F-2a but not on B-2
Why are there 3 Fund Balances? • What page has the “real” Fund Balance • Why is that Fund Balance correct? • Why is there an A-1 and B-1 Fund Balance
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.
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
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
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
Excess Surplus • How to calculate • What Aids are excluded from calculation
Encumbrances • How are they audited • See attached memo
Why are there 3 audit opinions • Opinion on audited financials • Opinion on internal controls • Opinion on compliance with grant requirements
The NJ Audit Program • The 2012-2013 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
Section 1-General Compliance • Appointment of Auditor • Risk Assessment • Internal control testing • Fraud analysis • Minutes and resolutions • The auditor reads all minutes • Look for bids, required policies, unusual discussions
Section 1-General Compliance • Treasurer??? • No longer required • Board Secretary takes over roles of Treasurer • A Board Designee prepares the bank reconciliation • Surety bond on Board Secretary
Section 1-General Compliance • ASSA, DRTRS and SEMI • 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 and transportation contracts
Section 1-General Compliance • Budgets and Transfers • Provide auditor with the audit year and the next years budget • Transfers should be in minutes • Any County Superintendent approvals should be provided • Transfers to Reserves-Very Important!! • Interfund Balances must cancel out
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 • Required review of open purchase orders at year end-Encumbrance Testing • w/o QPA $26,000 w/QPA $36,000
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
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?
Section 2-Specific Compliance • Fund 10 • Board Secretary and Treasurers Report • Auditor will tie each month out • Bank reconciliations • Not all cash accounts on Cash Report • They all need to be reconciled monthly • Petty Cash • Need to re-establish July 1
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
Section 2-Specific Compliance • Tuition • Have available your DOE certified rates • Can only have reserve for 2011-12 and 2012-13 • On-behalf • Prepare a schedule detailing all reimbursements and any Accts Rec at year end
Section 2-Specific Compliance • Compensation Reporting • All 1099’s were filed • All required payrolls were certified • Get completed W-9’s for all vendors • Pensionable Wages • Auditor will test pension reports • Reviewed as part of payroll testing • 1.5% for health benefits • Calculated on base wages/paid monthly to NJ • Provide info on procedures • Provide cafeteria plan
Section 2-Specific Compliance • Refunds, e-rate, Cancellations • Current year cancellations go against expenditure • Prior year are Misc Income • Travel Expenditures • See Memo • Health Insurance • Rules on self-insured • Sale and lease-back contracts
Section 2-Specific Compliance • Required Maintenance • Must spend 2% of replacement cost of new facility • Required schedule in J’s • Reserves • Capital reserve schedule • Rules for use • Excess Surplus • 2% of expenditures/minimum $250,000
Section 2-Specific Compliance • Fund 20 • What goes in Fund 20? • Grants should have budgets • Teachers salaries charged should make sense • A grant cannot have Accts Rec and Def Rev • TPAF and FICA reimbursement not allowed on Fed grants ( ED Jobs also included) • Calculation, form and payment made to NJ by October 1
Section 2-Specific Compliance • Fund 30 • Bonds and Grants • Purpose of Capital Project • Interest earned on bond proceeds • Arbitrage calculation • Unexpended bond proceeds • Schedule F-2 and F-2a-Budgetary basis
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 12-000-400-800 • Bond refunding-needs to be accounted for properly
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 • SAS #70-amended by SAS #88 report
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
Section 2-Specific Compliance • Fund 90-Agency Funds • Payroll • Payroll Taxes • Unemployment • Student Activities • See checklist • Other Groups working in the District
Section 2-Specific Compliance • Capital Assets • Capitalization level of $2,000 • Depreciation Schedules-lives-methods • Using an outside agency • How capital assets flow from B-2 to A-2 in CAFR • How footnote should be prepared
Section 2-Specific Compliance • Long-Term Liabilities • Compensated absences • Early retirement incentive programs (ERIP) • Bonds • Footnote requirements
Single Audit • Federal Requirements • OMB A-133 • If grant expenditures exceed $500,000 then a single audit must be performed • Low-risk Auditee-why you want to be one • ARRA-will always be considered High Risk • What is a major program? • Grant of $300,000 or 3% of award if in excess of $100 million
Single Audit • Major program audit requirements • Must be audited once out of a 3 year period • See Type A program worksheet • Schedule of Fed and State awards • Data Collection Form and filing • Findings • Corrective Action Plan
Section 3-Reporting • Audit Submission • Due December 5 • Sample reports are in audit program • Sample footnotes • Statistical section-The J’s • Unaudited
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
Questions Feel free to call or email me with any questions kathryn.perry@jumpcpa.com 732-240-7377