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Posting of Audit Adjustments

Posting of Audit Adjustments. Department of Finance and Administration Financial Control Division Chief Financial Officer Training September 26, 2011. Objectives Detail Requirements for posting audit adjustments Provide Overview of DFA-FCD Oversight Duties List Required Submissions

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Posting of Audit Adjustments

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  1. Posting of Audit Adjustments Department of Finance and Administration Financial Control Division Chief Financial Officer Training September 26, 2011

  2. Objectives • Detail Requirements for posting audit adjustments • Provide Overview of DFA-FCD Oversight Duties • List Required Submissions • Explain special handling of Specific Audit Adjustments • Describe what the Agency’s Expectation should be on Posted Audit Adjustments Posting of Audit Adjustments

  3. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the 2011Closing Instructions • FCD Oversight Functions Memo 10/3/2008 (Handout) http://nmdfa.state.nm.us/Memos_and_Notices.aspx Posting of Audit Adjustments

  4. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the 2011 Closing Instructions • FCD Oversight Functions Memo 10/3/2008 • Allows agencies to provide draft financial statements to the CAFR Unit for the preparation of the Comprehensive Annual Financial Report (CAFR) Posting of Audit Adjustments

  5. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the 2011 Closing Instructions • Submission Requirements with Notation of “FY__ Audit Adjustments” • Draft Financial Statements (MD&A, government-wide, fund financial, footnotes, and all supplemental information) • Excel Upload Spreadsheet – Emailed to CAFR.Unit2@state.nm.us Posting of Audit Adjustments

  6. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Submission Requirements with Notation of “FY__ Audit Adjustments” • Include Department/Program Code (A, P, R, Z), Budget Reference, Class Code, Nominal Accounts (Revenue and Expenditures) – the CAFR Unit will change nominal accounts to fund balance before posting • Information is required for the preparation of the budgetary schedules in the CAFR Posting of Audit Adjustments

  7. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Submission Requirements with Notation of “FY__ Audit Adjustments” • CFO certification of the audit adjusting journal entries (Handout) Posting of Audit Adjustments

  8. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Submission Requirements with Notation of “FY__ Audit Adjustments” • Copy of the Auditor’s Final trial balance by fund • Copy of complete listing of audit adjusting journal entries including any “client proposed adjustments” Posting of Audit Adjustments

  9. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Submission Requirements with Notation of “FY__ Audit Adjustments” • !!!!!!IMPORTANT!!!!!! • Once the fiscal year is closed, re-run a trial balance/query and give to auditors • Unadjusted balance per the auditor’s trial balance should be what is in SHARE as of 6/30/xx • Fund Balance will not roll forward if auditors do not start with the correct balance Posting of Audit Adjustments

  10. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Submission Requirements with Notation of “FY__ Audit Adjustments” • Final Bound copy of the financial statements are due to the CAFR Unit • Special Handling of Specific Audit Adjustments • Payroll Liabilities Adjustments • Movement of balances between funds will be posted - Mirror Posting of Audit Adjustments

  11. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Special Handling of Specific Audit Adjustments • Payroll Liabilities Adjustments • “Write-offs” cannot be posted without sufficient documentation showing the posted balances are incorrect • Based on agency’s analysis with verification from the Support Unit • Submit Help Desk Ticket Posting of Audit Adjustments

  12. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Special Handling of Specific Audit Adjustments • Payroll Liabilities Adjustments • Zero impact at the agency level for accounts 1019xx • Prepaid Travel Advances – Section CDS2.004 of the 2011 Closing Instructions • Follow Process in Attachment Q – Prepaid Travel Advance and Closeout Process of the 2011 Closing Instructions to clear travel advances from 171900 Posting of Audit Adjustments

  13. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Special Handling of Specific Audit Adjustments • Accounts Receivable write-offs – Section GLR3.002 of the 2011 Closing Instructions • Article IV Section 32 of the State Constitution – No obligation or liability owing to the State be extinguished except for payment or legal ruling • Agencies are allowed to “write-off” but not forgive the debt Posting of Audit Adjustments

  14. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Special Handling of Specific Audit Adjustments • Accounts Receivable write-offs – Section GLR3.002 of the 2011 Closing Instructions • New disclosure requirements • Receivable policy referencing State Constitution • Policy for tracking receivables written-off • Policy for recovery of written-off balances Posting of Audit Adjustments

  15. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Special Handling of Specific Audit Adjustments • Accounts Receivable write-offs – Section GLR3.002 of the 2011 Closing Instructions • New disclosure requirements • Total amount of receivables written-off life to date • Total amount of receivables written-off in current year • Total amount of receivables recovered Posting of Audit Adjustments

  16. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Special Handling of Specific Audit Adjustments • Accounts Payable Adjustments • An agency cannot obligate the State for liabilities once the appropriation period has lapsed, General Appropriation Act, Laws of 2010 and Chapter 6-10-4, NMSA 1978 • Accounts payable posted by the auditors will be RTPPYBs • Reconciling item on the budgetary schedules Posting of Audit Adjustments

  17. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Special Handling of Specific Audit Adjustments • Accounts Payable Adjustments • Corrections to the balance of 201900 need to be made at the voucher level, journal entries cannot be posted • Approved year-end accounts payables cannot be posted through the audit • All other accruals may not be posted, CAFR Unit will discuss any issues with the agency Posting of Audit Adjustments

  18. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Special Handling of Specific Audit Adjustments • Adjustments to 1019xx • Only adjustments moving ISGFIP balances between funds will be posted without additional information • Zero impact at the agency level Posting of Audit Adjustments

  19. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Special Handling of Specific Audit Adjustments • Adjustments to 1019xx • Any increase or decrease in the 1019xx accounts will require additional information • Just like reconciling your own checkbook, transactions need to be justifiable • Transactions need a second transaction to be “reconciled” Posting of Audit Adjustments

  20. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Special Handling of Specific Audit Adjustments • Adjustments to 1019xx • Any increase or decrease in the 1019xx accounts will require additional information • Other side examples – posted journal entry, deposit/wire, warrant/”fee”, warrant cancellation, stale dates Posting of Audit Adjustments

  21. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Describe what the Agency’s Expectation should be on Posted Audit Adjustments • Copy of posted audit adjustment packet • SHARE journal entry • Copy of required submission documents • Reconciliation of SHARE balances to the audited financial statements • Journal entry source code of AUD, journal ID AUDFYBU Posting of Audit Adjustments

  22. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Describe what the Agency’s Expectation should be on Posted Audit Adjustments • Populated Upload Template (Handout) Posting of Audit Adjustments

  23. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Describe what the Agency’s Expectation should be on Posted Audit Adjustments • Reconciliation of SHARE Balances to Financial Statements (Handout) Posting of Audit Adjustments

  24. Posting of Audit Adjustments

  25. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Describe what the Agency’s Expectation should be on Posted Audit Adjustments • Explanation for adjustments not posted, will be included within the email informing the agency the audit adjustments were posted… • AJE 1 was not posted because adjustments are attempting to “write-off” accrued payroll balances 223500 and 292900 • Amounts from 292900, if payroll related, should be reclassified to account 223500 Posting of Audit Adjustments

  26. Posting of Audit Adjustments • Audit Adjustments – Section CFR3 of the Closing Instructions • Describe what the Agency’s Expectation should be on Posted Audit Adjustments • Explanation for adjustments not posted • Net difference in account 223500 needs to be researched and a help desk ticket open for any additional help • Adjustments may inappropriately be affecting the reversion liability to the State General Fund Posting of Audit Adjustments

  27. Our business in life is not to get ahead of others, but to get ahead of ourselves, to break our own records, to outstrip our yesterday by our today. – Stewart B. Johnson Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion. – Jack Welch Posting of Audit Adjustments

  28. You can’t do today’s job with yesterday’s methods and be in business tomorrow. – unknown If you put good people in bad systems you get bad results. You have to water the flows you want to grow. – Stephen R. Covey Posting of Audit Adjustments

  29. Finally… A leader is best when people barely know he exists, when his work is done, his aim fulfilled, they will say: we did it ourselves. – Lao Tzu Posting of Audit Adjustments

  30. Questions??? Posting of Audit Adjustments

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