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OSA Update. Katie Thigpen, Audit Supervisor Holli Harrison, IS Audit Supervisor. NC Office of the State Auditor. Session Etiquette. Please turn off all cell phones. Please keep side conversations to a minimum. - PowerPoint PPT Presentation
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OSA Update
Katie Thigpen, Audit SupervisorHolli Harrison, IS Audit Supervisor
NC Office of the State Auditor
Session Etiquette
• Please turn off all cell phones.
• Please keep side conversations to a minimum.
• If you must leave during the presentation, please do so as quietly as possible.
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Session Topics
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Financial Audit Update
Information Systems Audit Update
Financial Audit Update
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Financial Audit Update - Topics• Summary of Financial Reporting for 2012• Preview of Financial Reporting for 2013• Audit Standards Update• Federal Compliance Audit Scope for 2013• Materiality and Risk in a Financial Statement Audit
Summary of Financial Reporting - 2012
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Findings/Issues Noted• Statement on Auditing Standard 115
Communicating Internal Control Related Matters Identified in an Audit
Summary of Financial Reporting - 2012
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Findings/Issues Noted• No pervasive reportable findings… TOUCHDOWN!
Summary of Financial Reporting - 2012
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Audit Adjustments Posted – Pervasive Items• Classification• Invested in Capital Assets, Net of Related Debt
• Unspent Debt Proceeds• Retainage and Accounts Payable
Summary of Financial Reporting - 2012
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North Carolina Accounting System
• Fiscal year 2011 – 4 pilot Universities• Fiscal year 2012 – all Universities• OSA concern – completeness of data file• Feedback
Preview of Financial Reporting – 2013
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Financial Reporting Standards Update (GASB)
• GASB 60 – Service Concession Arrangements
• GASB 61 – Financial Reporting Entity (amends GASB 14 & 34)
• GASB 62 – Codification of pre-1989 FASB
• GASB 63 – Deferred Outflows / Deferred Inflows
GASB 60
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Accounting and Financial Reporting for Service Concession Arrangements
• Definition / Criteria• Financial Reporting / Required Disclosures• GASB 60 Flowchart• Pro forma Impact
GASB 60
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GASB 60 Appendix C
GASB 61
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The Financial Reporting Entity Omnibus (an amendment of GASB Statements No. 14 and No. 34
• Fiscal Dependency AND Financial Benefit/Burden for Component Unit Treatment
GASB 61
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The Financial Reporting Entity Omnibus (an amendment of GASB Statements No. 14 and No. 34• Fiscal Dependency AND Financial Benefit/Burden for Component
Unit Treatment
• More Restrictive Blending Criteria for Identified Component Units
GASB 61
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The Financial Reporting Entity Omnibus (an amendment of GASB Statements No. 14 and No. 34• Fiscal Dependency AND Financial Benefit/Burden for Component
Unit Treatment
• More Restrictive Blending Criteria for Identified Component Units
• Additional Criterion for Blending for Identified Component Units
GASB 61
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The Financial Reporting Entity Omnibus (an amendment of GASB Statements No. 14 and No. 34• Fiscal Dependency AND Financial Benefit/Burden for Component
Unit Treatment
• More Restrictive Blending Criteria for Identified Component Units
• Additional Criterion for Blending for Identified Component Units
• Condensed Combining Information for Blended Component Units
GASB 61
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The Financial Reporting Entity Omnibus (an amendment of GASB Statements No. 14 and No. 34• Fiscal Dependency AND Financial Benefit/Burden for Component
Unit Treatment
• More Restrictive Blending Criteria for Identified Component Units
• Additional Criterion for Blending for Identified Component Units
• Condensed Combining Information for Blended Component Units
• Reporting an Asset for Equity Interest in Discretely Presented Component Units
GASB 61
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The Financial Reporting Entity Omnibus (an amendment of GASB Statements No. 14 and No. 34• Fiscal Dependency AND Financial Benefit/Burden for Component
Unit Treatment
• More Restrictive Blending Criteria for Identified Component Units
• Additional Criterion for Blending for Identified Component Units
• Condensed Combining Information for Blended Component Units
• Reporting an Asset for Equity Interest in Discretely Presented Component Units
• Going Forward / Pro Forma Impact
GASB 62
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Codification of Accounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and AICPA Pronouncements
• No new requirements• Add to the GASB codification• No change required for financial reporting
GASB 63
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Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position
• Background
• Reporting Requirements
• Statement of Net Assets becomes Statement of Net Position
• Statement of Revenues, Expenses and Changes in Net Assets becomes Statement of Revenues, Expenses, and Changes in Net Position
• Pro Forma Impact
GASB 63
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____________________ University Statement of Net Position Exhibit A-1
June 30, 2013 Page 1 of 2
ASSETSCurrent Assets:
Cash and Cash Equivalents $ 0.00 Restricted Cash and Cash Equivalents 0.00 Short-Term Investments 0.00 Restricted Short-Term Investments 0.00 Receivables, Net (Note _) 0.00 Due from Primary Government 0.00 Due from State of North Carolina Component Units 0.00 Due from University Component Units 0.00 Inventories 0.00 Hedging Derivatives 0.00 Notes Receivable, Net (Note _) 0.00 Other Assets 0.00
Total Current Assets 0.00
Noncurrent Assets:Restricted Cash and Cash Equivalents 0.00 Receivables, Net (Note _) 0.00 Restricted Due from Primary Government 0.00 Restricted Due from State of North Carolina Component Units 0.00 Endowment Investments 0.00 Restricted Investments 0.00 Other Investments 0.00 Hedging Derivatives 0.00 Notes Receivable, Net (Note _) 0.00 Capital Assets - Nondepreciable (Note__) 0.00 Capital Assets - Depreciable, Net (Note _) 0.00
Total Noncurrent Assets 0.00
Total Assets 0.00
DEFERRED OUTFLOWS OF RESOURCES Current Deferred Outflows of Resources: Accumulated decrease in fair value hedging derivatives 0.00 Other Deferred Outflows of Resources 0.00 Total Current Deferred Outflows of Resources 0.00 Noncurrent Deferred Outflows of Resources: Accumulated decrease in fair value hedging derivatives 0.00 Other Deferred Outflows of Resources 0.00 Total Noncurrent Deferred Outflows of Resources 0.00 Total Deferred Outflows of Resources 0.00 Total Assets and Deferred Outflows of Resources 0.00
GASB 63
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LIABILITIESCurrent Liabilities:
Accounts Payable and Accrued Liabilities (Note _) 0.00 Due to Primary Government 0.00 Due to State of North Carolina Component Units 0.00 Deposits Payable 0.00 Funds Held for Others 0.00 Unearned Revenue 0.00 Interest Payable 0.00 Obligations Under Reverse Repurchase Agreements 0.00 Hedging Derivative Liability 0.00 Short-Term Debt 0.00 Long-Term Liabilities - Current Portion (Note _) 0.00
Total Current Liabilities 0.00
Noncurrent Liabilities:Deposits Payable 0.00 Funds Held for Others 0.00 U. S. Government Grants Refundable 0.00 Funds Held in Trust for Pool Participants 0.00 Hedging Derivative Liability 0.00 Long-Term Liabilities (Note _) 0.00
Total Noncurrent Liabilities 0.00
Total Liabilities 0.00
DEFERRED INFLOWS OF RESOURCES Current Deferred Inflows of Resources: Deferred Inflows of Resources Under Service Concession Arrangements (Note _) 0.00 Accumulated increase in fair value hedging derivatives Other Deferred Inflows of Resources 0.00 Total Current Deferred Inflows of Resources 0.00 Noncurrent Deferred Inflows of Resources: Deferred Inflows of Resources Under Service Concession Arrangements (Note _) 0.00 Accumulated increase in fair value hedging derivatives Other Deferred Inflows of Resources 0.00 Total Noncurrent Deferred Inflows of Resources 0.00 Total Deferred Inflows of Resources 0.00 Total Liabilities and Deferred Inflows of Resources 0.00
GASB 63
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NET POSITIONInvested in Capital Assets, Net of Related Debt 0.00 Restricted for:
Nonexpendable:Scholarships and Fellowships 0.00 Research 0.00 Endowed Professorships 0.00 Departmental Uses 0.00 Loans 0.00 Restricted for Specific Programs 0.00 Other 0.00
Expendable:Scholarships and Fellowships 0.00 Research 0.00 Endowed Professorships 0.00 Departmental Uses 0.00 Loans 0.00 Capital Projects 0.00 Debt Service 0.00 Restricted for Specific Programs 0.00 Other 0.00
Unrestricted 0.00
Total Net Position $ 0.00
Highlights for Financial Reporting – 2013
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Pro Forma Update – 2013
Financial reporting follows GAAP.
The pro forma is provided to be a guide (not all inclusive)
Availability of Pro Forma (www.ncauditor.net)
Auditing Standards Update – 2013
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No impact on fiscal year 2013 audits
Federal Compliance Audits – 2013
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Federal Programs Selected For Audit
• Research and Development Cluster
• Student Financial Assistance Cluster
• Higher Education Grant
Audit Risk and Materiality
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Concept of Materiality• Financial Reporting• Auditing
Determining Materiality• Quantitative Factors• Qualitative Factors
Information Systems Audit Update
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• Summary of 2012 IS Audit Procedures
• Common Opportunities for Improvement - 2012
• Preview of IS Audit Procedures for 2013
Summary of 2012 IS Audit Procedures
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2012 – Third Year of Financial/IS Audit Partnership
Years one & two – no formal communication of IS issues to Universities
• Concerns were communicated verbally to frontline IT staff
• Issues with potential financial impact noted in financial audit workpapers
• Financial auditors found end-user controls to mitigate IS audit concerns
Summary of 2012 IS Audit Procedures
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2012 – Third Year of Financial/IS Audit Partnership
Year three – formal communication of IS issues to CIO• NOT findings in the Financial Statement audit• “Opportunities for Improvement”
Goal – help you avoid findings in an IT audit
Common Opportunities for Improvement - 2012
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• IT Risk Assessments incomplete or outdated
• Disaster Recovery plans not tested
• Inadequate separation of duties between programmers and DBAs
• Lack of access rights recertification on the server, database and/or network
Common Opportunities for Improvement - 2012
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• Less than optimal password settings
• End users with local administrator access (can override controls)
• Insufficient monitoring of network equipment and events
• Excessive number of privileged users on the network
Preview of IS Audit Procedures for 2013
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• Continue to work with Financial Audit
• New workpaper methodology this year – different understanding of IT controls
• Goal – improve efficiency of partnership so we have time for in-depth IT audits
