Prepared by Client (PBC) List - Part 1 Chapter 9 Presented by KPMG LLP and CSU KPMG LLP

1. Prepared by Client (PBC) List - Part 1Chapter 9Presented by KPMG LLP and CSUKPMG LLP

2. PBC List – General Update • The PBC list is preliminary • As the audit progresses, more items will be requested • If new items are added on a systemwide level, they will be added to the end of the list. No re-numbering • The list was reviewed extensively by a task force • Coordinated with IT audit • Clarified PBC items • More exhibits added to aid campuses • Mandatory formats are indicated, otherwise format is optional • Duplicate or obsolete items were deleted • Reorganized by area

3. Let’s Go Green! • Campus binders should have a labeled divider tab for every single PBC item • Provide PBC items to the audit team electronically on the flash drive handed out today, when possible • Electronic PBC items – label refer to the file on flash drive on the divider tab • “ORIGINAL, DO NOT REMOVE” should be clearly marked • All files and schedules provided should be clearly labeled and cross-referenced to the PBC list • Example: General #1

4. Sample Selections and Coordination • Sample selections will be made by the audit team within the first week of fieldwork • Campuses interested in receiving selections earlier should contact and coordinate with their manager/senior • Potential sample expansions if errors found • Interviews with the Auditors • Audit team will communicate the list of individuals that they will need to interview within first 2 weeks • PBC items related to interviews have been deleted from the PBC list • Please ensure that the meeting time is agreed to by both parties

5. The PBC List – General • #1 – Completed and Campus approved Reporting Package, including comprehensive analytical review • Analytical review explanations should not be entered into YES • Submit a separate Word document following the format in Exhibit 27 • #2 – Trial balance of CMP/CSU/GAP for periods 1-12 • The outcome should line up the three campus business units ledger data to show that the derived data in the xxGAP ledger is a complete population • A write up is included in Exhibit 29 that shows multiple methodologies to gather the data to create the schedule

6. The PBC List – General (cont.) • #4 – Supporting documentation for YES, Note 14 Transactions with Related Entities • The Chancellor’s Office (CO) will pre-populate amounts for interagency charges to the campus (e.g. state pro-rata) • Auxiliary amounts must be entered and reconciled with the auxiliary note input sheet, Note 8

7. The PBC List – General (cont.) • #5 – Detail and supporting documentation for nonexchange transactions included on the SRECNA • #6 – Access to original GAAP journal entries with attached supporting documentation • Do not make a separate copy of GAAP journal entries for the audit team (indicate “ORIGINAL, DO NOT REMOVE”) • Where applicable, refer to the GAAP journal entry number in exhibits and schedules provided to the audit team

8. The PBC List - General (cont.) • #7 – Prior Period Adjustments • Restatement adjustments to beginning net assets must be entered in YES, Note 15 • A separate Excel file must be provided of any prior period adjustments being pushed through the current year SRECNA and any prior year reclassifications for comparability to current year financial statements • Two separate tabs in the workbook for each type of adjustment • Supporting source documents for all adjustments must be providedin the binder

9. The PBC List – General (Cont.) • # 8 – Analysis of all non-GAAP accounting policies and procedures • Exhibits 28 and 30illustrate an acceptable write-up • Each campus will need to evaluate and quantify the impact of each non-GAAP accounting policy used to prepare the financial statements • Supporting source documents to be included in the binders and/or flash drive • #9 – Detail of all legal expenses (excluding CSURMA) • #10 – Completed GAAP Financial Reporting Checklist • Part A -due on the first day of fieldwork • Part B -due with the submission of the revised reporting package on 10/6/2008

10. The PBC List – General (cont.) • #11 – Completed MD&A Checklist • Checklist is found in Chapter 7 • #12 – Supporting calculations and source documentation for all amounts/percentages disclosed in the MD&A • #13 – Completed Draft Financial Statements, including MD&A and all footnotes • Submitted version of the Draft Financial Statements should be the FINAL DRAFT • All levels of management should have approved this version before submission to the audit team

11. The PBC List • #14 – #17 General FS Reporting Auxiliary Orgs • Contact information for independent auditors of each of the campus’ auxiliary organizations • Copy of all auxiliary organizations audited financial statements and completed Financial Reporting checklist for each auxiliary • Auxiliary Organizations consolidating and individual YES print outs that tie to the audited auxiliary financial statements • Reconciliation of YES, Note 14 to the Auxiliary Consolidated Workbook (Generated from YES)

12. The PBC List – Entity Level Controls • #28 – Access to view minutes from meetings of the President/Vice President • #29 – Access to view accounting policies and procedures manual • #30 – Most recent FISMA report – draft if not issued • #31 – Campus budget to actual analysis for 2007-08 - select dept and months • #32 – Campus Risk Assessment Annual Report – Per EO 715 prepared and presented to each campus president annually

13. The PBC List – Entity Level Controls (cont.) • #33 – Organizational Charts • Two charts requested: 1 -President down three levels 2 -Finance department detail from VP down • #34 – Access to view Employee Handbook • #35 – Access to view Code of Conduct • #36 – Job Descriptions of 2 newly hired accounting personnel – (IRM PBC 208) • #37 – Job Description/list of responsibilities of finance department personnel – (PBC #33 organizational chart)

14. The PBC List – Entity Level Controls (cont.) & Misc. • #38 – Employee turnover statistics or analysis by department or classification of employee • Do not create this schedule if it does not exist • #39 – 1 contract for a newly hired employee –(IRM PBC 208) • #40 –1 goal setting form and 1 evaluation form for a finance department individual – (PBC #33 organizational chart) • #41 –1 completed hew hire form/packet, including references, employment contract –(IRM PBC 208)

15. The PBC List - Cash • #43 – Listing of cash accounts broken out by CSU fund as of 6/30/2008 • The Cash Leadsheet shown in exhibit 1 is the required format to be used by all campuses. This will help with the SRB audit and reduce the number of questions to the campuses • Legal balances must tie out to SAM07, and GAAP balances must tie out to Reporting Package • #44 – Understanding of (nature of restriction) and supporting documentation for restricted cash

16. The PBC List - Investments • #47 – Investments leadsheet as of 6/30/2008 - YES, Note 3.2 and 3.3 • #48 – Access to original June 2008 investment statements or other supporting documentation for any investments not managed by US Bank/SWIFT pool • #49 – Confirmation for non-US Bank investment balances

17. The PBC List – Investments (cont.) • #50 – Consolidated rollforward by type of investment, investment purchases and sales with supporting documentation - Exhibit 2. CO will provide SWIFT investment rollforward information. • #51 – Detail leadsheet of investment income and accrued interest receivable as of and for the year ended 6/30/2008 that agrees to the SRECNA and SNA - Exhibit 18 (Requested Format). If using different format, provide CSU funds needed for SRB audit.

18. The PBC List – Accounts Receivable • #52 – Leadsheet of accounts receivable with 6/30/2008 and 6/30/2007 balances - YES, Note 4.1 • #54 – Reconciliation of the SCO Tab Run Report 6/30/2008 balances to the state appropriations receivable balances - Exhibit 3a and 3b • #55 Listing of students and vendors with their outstanding balances at 6/30/2008 (aging report). Must agree to leadsheet. • #56 – Detail of accounts receivable from the CO • #57 – Detail of other accounts receivable as presented in YES, Note 4.1

19. The PBC List – Accounts Receivable (cont.) • #58 – Detail of accounts receivable by invoice due from grants and contracts • #59 – Policy for establishing allowance for doubtful accounts and writing off uncollectible receivables - Exhibit 5 • #60 – Allowance for doubtful accounts leadsheet and detailed supporting documentation - Exhibit 4. Must agree to YES, Note 4.1 • #61 – Calculation and analysis of the 6/30/2008 allowances established for each type of receivable.

20. The PBC List – Leases/Notes Receivable • #62 – Copies of new lease or note agreements • Campus is lessor. • Include all operating/capital entered into during the fiscal year. • #63 – Schedule of lease/note income - Exhibit 6. Must provide future minimum lease income for operating leases in YES, Note 4.2 • #64 – Detail of lease/note payments received during the year

21. The PBC List – Student Loans Receivable • #65 – Student loans receivable aging and reconciliation (review for collectibility) • #66 – Student loans receivable leadsheet. Include loans by type (e.g. Perkins) at 6/30/2008 and 6/30/2007 and related allowances by type - Exhibit 8. Must agree to YES, Note 4.4 • #67 – Calculation and analysis of the 6/30/2008 allowance for uncollectible student loans receivable • #68 – June 2008 ECSI Report. Must agree to item #66

22. The PBC List – Prepaids • #73 – Detail of prepaid expenses and other assets at 6/30/2008 - Exhibit 7

23. Questions