Audit Preparation

1

• Audit Preparation

MIKUNDA, COTTRELL CO. Certified Public
Accountants and Consultants 3601 C Street,
Suite 600 Anchorage, Alaska 99503 [phone]
2
Items for Discussion

• Key procedures for keeping the books
• Audit prep packages
• Effects of the risk assessment auditing standards
• Reports and documentation commonly requested by
  auditors
• Key sources of information
• New standards that will affect financial
  statement audits

3
Critical Year-End Procedures

• Reconcile its a matching thing
• Balance sheet and footnote items
• Does the beginning balance agree with the prior
  year financials?
• Detail or ledger reports vs. general ledger
• Grants
• Expenditures in the GL vs. grant reports
• Revenues and expenditures
• Differences due to matching requirements,
  revenues based on student counts, overspent
  grant, etc.
• Other revenues
• Agree beginning fund balance to prior year
  financials
• Add up the due to and due from accounts net to
  zero
• Add up transfers in and transfers out net to
  zero
• Watch the 70 rule obtain a waiver if you dont
  meet this

4
Audit Prep Packages

• Prepare binders to speed up the audit
• Work on the prep package after year-end
  procedures
• Prep package wont take very long
• Remember the risk assessments - not everything
  will be listed on the prep package

5
Audit Prep Packages, continued

• Items to send your auditor before the audit
• Confirmations send them ASAP
• Trial balance can be preliminary
• Items your auditor really wants before the audit
• Federal and State Schedules
• Ranges of numbers for random selection
• Updated internal control documentation

6
Effects of the Risk Assessment Standards

• From substantive approach to risk-based
• Substantive testwork must be done after risk
  assessments
• Planning required to assess risks

7
Single Audit

• Federal and State Schedules
• 500,000 of Federal expenditures Federal Single
  Audit
• 500,000 of State Expenditures State Single
  Audit
• Current year expenditures for individual or
  clustered programs determine major programs
• Guidance in A-133 and State Single Audit Guide
  for major program determinations
• Watch out for American Recovery and Reinvestment
  Act awards high risk

8
Reports and Documentation Commonly Requested

• Balance sheet detail reports what makes up the
  ending balance?
• Bank reconciliations
• Inventory
• Accounts receivable
• Fixed assets
• Accounts payable
• Accrued payroll
• Accrued leave
• Deferred revenue
• Fund balance restrictions and reserves
• Dont forget the 10 rule

9
Reports and Documentation Commonly Requested,
continued

• Grant Items
• Grant analysis worksheets must agree to Federal
  and State schedules
• Grant awards
• Grant expenditure reports
• Other Items
• Bank statements for the whole year
• Check register starting the day after year-end
  through the first day of the audit

10
The PERS Situation

• SB 125 effect on financial statements
• Write-off of NPO
• On-behalf for PERS and TRS and the GASB 24
• Alaska school districts directed to record the
  full on-behalf in the operating fund
• Allocate on-behalf expenditures to functions
  based on covered payroll follow DEED guidance
• Provide documentation to DEED

11
GASB 34 and Footnote Items

• Schedules for the following must have beginning
  balance, additions, deletions, and ending balance
  by function
• Capital assets
• Capital project funds - identify costs not
  capitalized and note the function they belong to
• Depreciation by function
• Capital leases
• Debt
• Accrued leave
• Show hours and rates for beginning and ending
  balances

12
GASB 34 and Footnote Items, continued

• Interfund activity
• Self insurance
• Contingencies
• Subsequent Events
• Review prior year financials for any other items
• Provide information for any new disclosures

13
New Standards

• Effective this year
• GASB 49
• SAS 115
• Coming soon
• GASB 54

14
Resources
Websites Governmental Accounting Standards
Board www.gasb.org Government Finance Officers
Association www.gfoa.org CFDA.gov www.cfda.go
v Office of Management and Budget www.whitehous
e.gov/omb American Institute of Certified
Public Accountants www.aicpa.org Alaska
Association of School Business Officials www.alasb
o.org State of Alaska Department of Education
and Early Development www.eed.state.ak.us