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SRB GAAP Preparation Presented by: Kathy Skara, CO and Frank Wimer, KPMG LLP AUDIT

SRB GAAP Preparation Presented by: Kathy Skara, CO and Frank Wimer, KPMG LLP AUDIT. SRB Agenda. Introduction Programs in SRB Key Dates and Deadlines Legal Fluctuation (flux) Analysis – Q&A SRB Related Lead Sheets Campus GAAP Entries/Query YE Accruals CSU Funds in SRB SRB Contacts. 2.

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SRB GAAP Preparation Presented by: Kathy Skara, CO and Frank Wimer, KPMG LLP AUDIT

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  1. SRB GAAP PreparationPresented by: Kathy Skara, CO and Frank Wimer, KPMG LLPAUDIT

  2. SRB Agenda • Introduction • Programs in SRB • Key Dates and Deadlines • Legal Fluctuation (flux) Analysis – Q&A • SRB Related Lead Sheets • Campus GAAP Entries/Query • YE Accruals • CSU Funds in SRB • SRB Contacts Year-End GAAP Training 2

  3. Introduction The Chancellor’s Office (CO) Systemwide Revenue Bond (SRB) team relies in part on campus support to complete the SRB Financial Statements on time and in accordance with GAAP. We greatly appreciate the support we receive each year from the campuses and realize the timing of the requests is taxing on the them. The timely completion of the fluctuation (flux) analysis greatly facilitates our ability to publish SRB financials on schedule. We will continue to provide campuses with the accounts by PROGRAM that need to be explained as well as the CSU funds and object codes associated with them; and conference calls will be scheduled towards the end of the process for outstanding issues. May 2010 Year-End GAAP Training

  4. Introduction There are no new SRB lead sheets this year but an additional request has been added regarding some year end accrual information. Some lead sheets have been changed slightly to make it easier for campuses to understand what data is needed; but the basic structures remain the same. Regarding the campus GAAP entries, last year we realized there were instances where we needed more information than what was provided in the “SRB funds only GAAP query”; therefore, we are requesting all of your GAAP entries, not just SRB. May 2010 Year-End GAAP Training

  5. Program in SRB • Housing • Parking • Student Unions • Health Facilities • CERF • Auxiliary Organizations May 2010 Year-End GAAP Training

  6. CO SRB team to provide campuses legal flux analysis templates and drilldowns Campuses to return legal flux analysis completed to CO SRB team Campuses to submit to CO SRB team unauditedGAAP entries for all funds Campuses to submit to CO SRB team SRB required lead sheets Campuses to submit to CO SRB team unaudited GAAP flux analysis review (word doc.) Key Dates and Deadlines August 20, 2010 September 13, 2010 September 13, 2010 September 13, 2010 September 13, 2010 May 2010 Year-End GAAP Training

  7. Campuses to submit to CO SRB team Reporting Packages file CO SRB team to schedule Q&A conference calls Campuses to submit to CO SRB team audited GAAP entries Campuses to submit to CO SRB team audited SRB required lead sheets Campuses to submit to CO SRB team revised Reporting Packages Key Dates and Deadlines October 18, 2010 October 18-29, 2010 October 28, 2010 October 28, 2010 October 28, 2010 May 2010 Year-End GAAP Training

  8. SRB Financial Statements complete Deadline to send SRB Financial Statements to SCO Key Dates and Deadlines December 2, 2010 December 9, 2010 This earlier date allows us to provide campuses with footnote information sooner and complete SCO Reports on time Complete SRB Financial Statements Provide campuses with footnote information Complete SCO reports May 2010 Year-End GAAP Training

  9. Legal Fluctuation (Flux) Analysis (Q&A) • Campuses to receive from the CO SRB team: • Flux analysis templates for each Program AND • Drilldowns/ Amounts by CSU fund(s) & object code(s)file for each Program, which will provide the chart field string. Each drilldown file by Program will contain tabs by SRB line item that needs flux analysis. It will also contain: • Trial balances (pivots) with CY and PY data • GAAP cross walk query • which tells you what GAAP Natural class is assigned to each object code May 2010 Year-End GAAP Training

  10. Legal Fluctuation Analysis (Q&A) What does materiality mean for SRB? KPMG PERSPECTIVE • KPMG has assigned $75K and 10% variance to be the materiality threshold per Program per SRB line item for this audit year. • What may seem immaterial at an individual campus level could aggregate to a material amount at the consolidated SRB level. Since the SRB audit is conducted at a disaggregated level, where our information is reviewed by each program (6) and each campus (23), we need to look at fluctuations and differences that are considerably less than the SRB consolidated materiality, since these smaller amounts may add up to a significant amount in total. May 2010 Year-End GAAP Training

  11. Legal Fluctuation Analysis (Q&A) What’s an “SRB line item”? KPMG PERSPECTIVE • Some SRB line items are at the object code level but most are not. They usually contain multiple object codes. In some cases, the SRB line item equals the GAAP Natural Class and in other cases it equals the GAAP object code category. Since it varies, the CO SRB team will let you know what the definition is by providing separate tabs in the drilldown file at the SRB line item level. • Examples of SRB line items are: • A/R Net equals GAAP nat. class 711103 with multiple obj. codes • Travel equals GAAP obj. code category 606 with 2 object codes • G&A contains two obj. codes and 2 GAAP obj. code categories, 612 and 617 May 2010 Year-End GAAP Training

  12. Legal Fluctuation Analysis (Q&A) • For example if SRB line item Accounts Payable increased by $200,000 AND 14% from PY for Housing; then an explanation would be required in the Housing template as to the reason for the increase. • Determining how many campuses and which ones need to explain the variance would require each campus to review the Accounts Payable tab in the drilldown file for Housing. May 2010 Year-End GAAP Training

  13. Legal Fluctuation Analysis (Q&A) CO SRB TEAM PERSPECTIVE • CO SRB team determines which campuses need to respond to each SRB line item by Program. This is communicated to the campuses through the drilldowns file. • The drilldowns file contains tabs for each SRB line item for both Net Assets and SRECNA, i.e. AR net, A/P, contractual services, G&A, etc. Campuses need to open each tab and look for their campus drilldown information. If the campus is highlighted, then an explanation from that campus as to the change from PY to CY is required. • Using A/R Net as an example, if only one campus is highlighted on the A/R Net tab then just one campus needs to respond. If there are multiple campuses highlighted, than all those campuses need to respond as well. May 2010 Year-End GAAP Training

  14. Legal Fluctuation Analysis (Q&A) • If there was a prior year GAAP adjustment for a particular SRB line item for a particular campus, the CO SRB team will provide that information with the campus drilldowns in order for the campus to take that information into consideration since it will impact the flux analysis response. May 2010 Year-End GAAP Training

  15. Legal Fluctuation Analysis (Q&A) CAMPUS PERSPECTIVE • Campuses need to populate the flux analysis template with their variance explanations. • Using A/R Net as an example, the campus will determine which object codes within A/R Net are the reason for the variance. It could be one object code or multiple object codes that are the cause. This is where the campus is to use judgement. • For each object code that is contributing to the variance in A/R Net, an entry needs to be made in the flux analysis template which explains why that object code increased or decreased in the current year. • Other information that needs to be provided are object code name, SCO fund, CSU fund, and respondent information. May 2010 Year-End GAAP Training

  16. Exhibit 34 Sample Housing Flux Analysis Template TIP - copy and paste fields from drilldown to make your job easier! Campus to fill in May 2010 Year-End GAAP Training

  17. Sample Travel SRB Line Item Tab Any PY GAAP adjustments will be detailed here Housing drilldowns file Needs Explanation “Travel” SRB line item “Repair & Maintenance” SRB line item May 2010 Year-End GAAP Training

  18. Legal Fluctuation Analysis (Q&A) Is my response sufficient? • Please refer to the following guidelines for flux analysis responses : • Adequately describe the reasons for the change year over year; and the explanations should substantially cover the amount of the change. • Identify and explain all significant or unusual items and quantify those instances. • Spell out acronyms • Provide why it was booked not just what was booked. • Let us know if what you booked is due to a change in policy, or if it was booked incorrectly in the PY or CY. May 2010 Year-End GAAP Training

  19. SRB Related Lead Sheets Standardization is important • SRB related lead sheets: • Legal to GAAP roll forward of SWIFT Investments (Exhibit 32) • Investment Income (Exhibit 18) • Deferred revenue reasonableness test (Exhibit 12) • Student Tuition and fees (Exhibit 33) • Sales and services of auxiliary enterprise revenues (Exhibit 16) May 2010 Year-End GAAP Training

  20. SRB Related Lead Sheets CHANGES • Only minor changes to SRB related lead sheets: • Always want reason for entry; therefore added to those lead sheets that were missing this information. • Added subtotal sections to investment income by type of investment, SWIFT vs. SMIF. • Added comments to make clear that certain totals should equal another source document amount. For example, the GAAP total in the legal to GAAP roll forward of SWIFT investments should equal the SWIFT balances including June accrual and unrealized gain/loss in the SWIFT roll forward schedule. May 2010 Year-End GAAP Training

  21. SRB Related Lead Sheets CHANGES • Only minor changes to SRB related lead sheets: • Moved Housing and Parking Reasonableness Test work sheets over to Sales and Services of Auxiliary Enterprises file where they belong. They were with the Tuition and Fees file last year in error. • For summer sessions in the Deferred Fees Reasonableness Test, changed it to reference programs not sessions. May 2010 Year-End GAAP Training

  22. SRB Related Lead Sheets GUIDELINES • Some Instructions for SRB related lead sheets: • These are required formats – please do not change them without approval from the CO SRB team and the CO SRB KPMG audit team. Campus auditors cannot give you permission to change SRB related lead sheets. • Provide all information by CSU fund and all CSU funds must be represented even if the sample does not list all of them. If you have a balance or activity in a CSU fund, include it. • Provide reason for entry and JE id, which should match the JE id in the GAAP query. • GAAP manual contains other instructions as well May 2010 Year-End GAAP Training

  23. SRB Required Lead Sheets • The follow 6 slides are screen shots of the SRB required lead sheets. • Some have had rows and or columns removed to allow the entire format to be viewed in this slide presentation for talking point purposes. For complete templates reference the lead sheet exhibits provided in the GAAP manual. Year-End GAAP Training

  24. Exhibit 32 Legal to GAAP Roll Forward of SWIFT Investments May 2010 Year-End GAAP Training

  25. Exhibit 18 Investment Income Top portion of lead sheet May 2010 Year-End GAAP Training

  26. Exhibit 18 Investment Income bottom portion of the lead sheet May 2010 Year-End GAAP Training

  27. Exhibit 12 Deferred revenue reasonableness test May 2010 Year-End GAAP Training

  28. Exhibit 33 Tuition and Fees Top portion of lead sheet May 2010 Year-End GAAP Training

  29. Exhibit 33 Tuition and Fees bottom portion of the lead sheet May 2010 Year-End GAAP Training

  30. Exhibit 16 Sales and Services of Auxiliary Enterprises Housing and parking reasonableness test tabs included here May 2010 Year-End GAAP Training

  31. Exhibit 35 Campus Unaudited GAAP Entries Query Now we want everything! CHANGES • No longer need to exclude NON SRB CSU funds from the query • If you are going to use the same query as last year, please remove the listing of SRB CSU funds in your criteria. • Without these exclusions your query now equals your campus “GAAP Journal Lines Query”. • Reference Exhibit 35 in the GAAP manual for screen shots of the query. • If all campuses had the same order of fields it would make it much easier for the CO SRB team to aggregate the data! May 2010 Year-End GAAP Training

  32. Year End Accruals Important to SRB NEW REQUIREMENT • No new lead sheets for SRB • But, some campus accruals need to be provided separate from and in addition to the unaudited GAAP entries query in order for us to be clear on what the entries relate to and their impact on the SRB Financial Statements. • Please add a tab in the unaudited GAAP entries query file that provides the following information per journal entry- • Journal id • Type of Accrual • CSU fund • Natural Class GAAP object code • And importantly the ADJUSTED GAAP BALANCE This info. is not in GAAP query May 2010 Year-End GAAP Training

  33. Specific accruals the CO SRB team needs are: Compensated Absences Salaries and Benefits Unrecorded Liabilities We realize these entries are included in the unaudited GAAP entries query but we still need this additional information. Year End Accruals Example Only May 2010 Year-End GAAP Training

  34. CSU Funds in SRB CSU funds May 2010 Year-End GAAP Training

  35. SRB Team Send required files to • CO • Kathy Skara, Manager • (562) 951-4624; kskara@calstate.edu • Terri Williams, Supervisor • (562) 951-4386; tmwilliams@calstate.edu • Brian Lee, lead accountant • (562) 951-4399 blee@calstate.edu • Angie Renaud, accountant • (562) 951-4613; arenaud@calstate.edu • KPMG • Frank Wimer III, Manager • (213) 533-3322; fwimeriii@kpmg.com May 2010 Year-End GAAP Training

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