Posting of Audit Adjustments

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Posting of Audit Adjustments

Department of Finance and AdministrationFinancial Control DivisionChief Financial Officer Training September 26, 2011

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Posting of Audit Adjustments• 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

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Posting of Audit Adjustments• 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




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Posting of Audit Adjustments• 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)

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Posting of Audit Adjustments• 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 [email protected]

mailto:[email protected]

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Posting of Audit Adjustments• 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

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Adjustments”• CFO certification of the audit adjusting journal entries (Handout)

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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”

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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

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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

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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

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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

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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

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Closing Instructions• New disclosure requirements• Receivable policy referencing State Constitution• Policy for tracking receivables written-off• Policy for recovery of written-off balances

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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

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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

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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

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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

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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”

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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

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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

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Audit Adjustments• Populated Upload Template (Handout)

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Audit Adjustments• Reconciliation of SHARE Balances to Financial Statements

(Handout)

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Posting of Audit Adjustments

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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

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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

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Posting of Audit AdjustmentsOur 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

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Posting of Audit AdjustmentsYou 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

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Posting of Audit AdjustmentsFinally…

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

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Posting of Audit Adjustments• Questions???

Documents

Posting of Audit Adjustments