Year-End GAAP Workshop
Breakout Session Q &A’s
May 20-21, 2008
1. What is a reasonable estimate of time for gathering the PBC items together?
 The gathering of the PBC items should be approached from a project
management perspective. Immediately subsequent to the GAAP training,
the campus should begin to review the PBC list, analyze the data
dependencies, and establish milestones so that the progress towards the
planned completion can be monitored. See also question #45.
2. Will the CO be providing the standard queries that have been developed in a
central location?
 The queries will be posted on the Chancellor’s Office website
http://www.calstate.edu/sfsr/gaap/ with the 2007-08 GAAP Reporting
Manual.
3. Outstanding check list query with funding source information best method?
 The query will be posted on the Chancellor’s Office website
http://www.calstate.edu/sfsr/gaap/ with the 2007-08 GAAP Reporting
Manual.
4. How can we get a definition of all of the acronyms commonly used throughout
the audit process?
 A list of common acronyms will be accumulated and posted to the
Chancellor’s Office website http://www.calstate.edu/sfsr/gaap/ with the
2007-08 GAAP Reporting Manual.
5. Are we allowed to tweak the required schedules?
 Tweaking the required schedules will probably be acceptable. Campuses
tempted to change the schedules should closely review the reasoning for
the change and make every attempt to comply with the required
schedule format. The required schedules are largely to facilitate the
Systemwide Revenue Bond audit. If you modify a required schedule,
please be sure to communicate with your campus manager and senior so
that they are aware of your changes, walk them through how the PBC
item still meets the requirement, and obtain their approval that the
modified schedule will suffice for audit purposes.
6. Can we get an electronic copy of the flux analysis?
 The CD included in the manual or handed out at the training contains an
electronic copy of the entire GAAP 2007-08 Reporting Manual. The
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manual will also be posted on the Chancellor’s office website
http://www.calstate.edu/sfsr/gaap/.
7. YES compatibility issues with Microsoft Office 2007 and Internet Explorer
 YES is not compatible with Microsoft Office 2007. Excel 2003
(11.6560.6568) SP2 or higher, and Internet Explorer 6.0 or higher are the
two required software to extract data from YES. We know that this is
inconvenient; however, campuses should explore local options to
overcome any compatibility issues they encounter. Worst-case scenario,
the campus can contact the Systemwide Financial Reporting group at the
Chancellor’s Office to extract the data from YES.
8. What does YES stand for?
 Year End System.
9. Where can we find the additional Chapter 5 passdown schedules?
 All of the passdown schedules will be available on the Chancellor’s Office
website http://www.calstate.edu/sfsr/gaap/. (Note: passdown entries
discussed in the training were from PY and used as examples only).
10. What bonds were issued in the current year?
 Systemwide Revenue Bonds (SRB) 2007C and 2008A.
11. What is the threshold for the search for unrecorded liabilities? Can each campus
set its own threshold?
 The task of the campus is to report the expenses in the correct period.
The campus can set whatever threshold they feel is appropriate. The
KPMG audit team will set the scope of the search for unrecorded
liabilities testwork based on the total expenses of the campus, prior year
or current year issues noted and professional judgment. It is important
for campuses to remember that setting a threshold is a non-GAAP policy
and they will need to quantify the potential impact of this policy each
year.
12. How will the campus example for supplies and services expense be
communicated?
 The Sacramento example shown at the training will be available at the
Chancellor’s Office website http://www.calstate.edu/sfsr/gaap/ with the
2007-08 GAAP Reporting Manual in a section labeled “Campus
Examples”.
13. How can the campus decide to provide the data for use with MUS (Monetary
Unit Sampling) vs. KSP (KPMG Sampling Plan)?
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 There are a limited number of file formats that are compatible with MUS.
The most compatible formats are Excel or .txt formats. MUS may be used
with a .pdf formatted file, but it is much more difficult. Data may be at
the lowest level possible, like an accounts payable voucher, or may be
provided at an aggregate level, like a ledger level, for use with MUS.
However, if given at an aggregate level, teams will come back requesting
detail for a subset of accounts. Because substitutions may not be made
for samples selected by MUS, files submitted by the campus for expenses
testing cannot contain items that have been capitalized. Once MUS is
run, if a capitalized item is selected, it will be deemed an error. Files that
do not comply with the file types or content requirements listed above
will be subject to KSP. Note that KSP typically will yield twice the sample
size of MUS selected samples.
14. How do you provide the data for PBC item #130B?
 A query of every purchase order created in the fiscal year over $50,000
that has a payment plus every payment over $50,000, if not already
captured, will provide the correct population for KPMG testing.
15. How should the approved reporting package be submitted? Campus and KPMG
 The campus should submit electronically the campus approved reporting
package to the KPMG team on day one of fieldwork with the date and
time frozen. The KPMG campus manager must submit the KPMG
approved reporting package with the date and time frozen to the
Systemwide KPMG team and the Chancellor’s Office via email along with
the analytical review Word document and the Prior Period
Adjustments/Reclassifications Excel file by October 16th.
16. If campuses book an estimate at year end but know it will be adjusted after the
issuance of the approved reporting package v1, how can a significant deficiency
be avoided?
 The campus should tell the audit team upfront about adjustments that
will happen, anything that they are aware of or anything that they are
still working on. This should preferably be communicated to KPMG in
writing on day one of fieldwork along with the campus approved
reporting package or as identified by the campus (prior to identification
by KPMG). Note that if this happens, this should extend to one, possibly
two items at the most; otherwise, this would indicate that the campus
was not ready for the audit. Note that if the campus subsequently
identifies an adjustment (prior to identification by KPMG) that was not
communicated to KPMG on day one of fieldwork, the audit team will
need to evaluate the nature of the adjustment for consideration as a
potential significant deficiency. If a KPMG inquiry prompts a campus
audit adjustment or if the number of items the campus is still working on
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is too great, that could lead to a significant deficiency. KPMG will hold off
auditing the line item where the adjustment will occur, so if there will be
significant work to audit the line item, the campus will need to provide
the final reporting package to the KPMG team in sufficient time to
complete the work before the October 16th deadline.
17. When will KPMG communicate when a significant deficiency has occurred?
 KPMG will communicate a significant deficiency to the campus when it is
confirmed. All deficiencies will be communicated to the campus during
their weekly status meetings and will be accumulated/tracked on the
Summary of Control Deficiencies (SICD) document. All deficiencies listed
on the SICD document will be reviewed, both individually and in the
aggregate, by the campus audit manager and partner to determine final
status.
18. If a significant deficiency has been identified and the campus has other
compensating internal controls that are operating effectively, can we avoid the
original significant deficiency that was proposed?
 It depends. If KPMG believes that there is a lack of effective internal
controls based on their observations and the campus is able to explain
and demonstrate effective compensating controls, then yes the
significant deficiency can be avoided. Note that KPMG may need to
perform additional testwork related to the compensating control. If
there is an audit adjustment as a result of a lack of effective internal
controls, then no because the compensating controls did not work.
19. Can the CO provide non-GAAP policies on a systemwide basis?
 The Chancellor’s office will distribute the non-GAAP policies observed on
a systemwide basis. Please note that the list is not all-inclusive. It is the
responsibility of the campuses to identify and analyze their non-GAAP
policies.
20. When are management letters issued?
 Within 60 days after the issuance of the campus stand-alone financial
statements.
21. The campus is addressing financial reporting issues in the risk assessment per
NACUBO, is that a best practice?
 Yes.
22. How will the campuses retain detail information from the Student Financial
system, in case a test of details is needed, with the reduced number of PS nonproduction instances?
 The Chancellor’s Office will explore the options with CMS central.
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23. Can the CO include the fund-account-program group-class on passdown entries?
 Due to the short turnaround, the CO will make every effort to provide
this information. However, if it is not feasible, it will be provided
effective next fiscal year.
24. What is the difference between the threshold in the front of the manual and the
threshold that Chris Ray gave out? How do they relate to adjustments including
prior period?
 The threshold provided in the manual slipcovers is only used for the
analytical review included in the reporting package. The amount provided
verbally by Chris Ray is the posting threshold for the campus that dictates
what items will be listed on the summary of unadjusted audit
adjustments or will be adjusted to the campus financial statements.
25. How are CIRS H43 & 46 reports more reliable than PS HR Absence Management
data if both are produced from campus input?
 The CIRS reports have been tested over a number of years. Since the
Absence Management reports are new, they have not been tested. Once
the audit teams test the reports and how they are generated, and based
on the outcome of IT controls tested at each campus, they may be
deemed to have more reliability.
26. What are the options other than the Sacramento supplies and services expense
detail method?
 There are a number of alternative ways to accomplish this PBC item.
Campuses are encouraged to share methods with successful outcomes.
27. Can we make the SRB and financial statement audits more efficient to reduce
duplicative questions?
 The required PBC schedules have been instituted this year in an effort to
facilitate the SRB audit and reduce the number of questions that are
bounced back to the campus after the financial statement audit.
28. Does the IRM testing that is happening now coincide with the IT A-133 higher
scope campuses?
 Yes.
29. What will KPMG use during the interim fieldwork time cards or timesheet?
 Either. Whichever are used by your hourly employees to report their time
worked to the payroll department.
30. 0948 investment rollforward by CSU fund?
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 CSU fund is not provided on any investment related passdown schedules
as the allocation of the cash and investments at each campus are
managed by the campus.
31. Tuition discounting - there are two methods, can the campus select the method
to use to report?
 The KPMG audit procedure for tuition discounting has been updated to
clarify that while the GAAP reporting manual describes the indirect
method in detail that the campus may elect either approach. This should
eliminate any confusion regarding this item.
32. If an activity is supported by a student fee or ticket sales, should it be reported
as sales and services of educational activities or other operating revenues?
 Based on the question, it is assumed that the activity in question is
related to athletics. If the activity is self-supporting, then it is reported as
an auxiliary enterprise. If the activity is non-self-supporting, then the
expenses are reported as student services and the revenues are reported
as sales and services of educational activities.
33. Threshold for booking a Note 15 prior period adjustment?
 This is a judgment call. The campus and the audit team should discuss
any items that are thought to be prior period adjustments as soon as they
are known to ensure that they are dealt with properly. Generally, the
amounts provided to campuses verbally by Chris Ray during the GAAP
training, should be used for individual prior period adjustments and
reclassifications. Additionally, campus management should evaluate any
such adjustments below the posting threshold to determine, if in the
aggregate, these adjustments should also be posted to Note 15.
Coordinate with your campus audit team.
34. Flux analysis $ amount only, % only or $ & %?
 The fluctuation analysis is based on dollar amount and percent of change.
35. M D & A for the CSU consolidated financial statements is highly summarized.
Can a campus follow that example?
 The campus should use the campus proforma stand-alone report
provided as a starting point.
36. The last element of the M D & A is forward looking. How does that reconcile
with “no estimates”?
 M D & A is not forward looking. The campus should communicate only
known facts.
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37. How and when are the IRM audit findings communicated to the campuses
financial audit staff? Is a response required then?
 IRM communicates with campus management as exceptions occur. The
final results of the IRM testing are communicated to the financial audit
teams usually at the August CSU KPMG internal training.
38. PBC % complete column, how is it used? Could a second column be added to
track the campus status on the item?
 The % complete column was used to communicate for the weekly
systemwide status calls. The campus and the campus audit team can
agree to alter the PBC list accordingly as a local communication tool.
39. When can xxGAP derivation be run? We need an estimated date please?
 The xxGAP derivation should not be run until the Systemwide Financial
Reporting group indicates that all of the known mapping changes have
been completed. If the campus wants to derive now, the derived batches
can be deleted and re-derived later.
40. How much attention will the KPMG audit teams pay to the CSU fund breakout?
 This will largely only be used for the required exhibit schedules for the
audit SRB related items. Otherwise this field or breakout is not
meaningful to the KPMG teams, unless it crosses net asset categories.
41. PBC #29 Policies & Procedures Manuals – What if you don’t have one?
 All CSU campuses should have various resources that comprise their
policy and procedures manuals. KPMG understands that campuses
usually do not have one comprehensive document that fulfills this role,
instead it is a myriad of websites and campus documents. For this PBC
item, campuses should provide a document that lists out each
section/topic and the resource (i.e. website, contact person, etc).
42. Audited Auxiliary Organization Financial Statements – Can KPMG question the
numbers on these statements?
 KPMG refers and relies upon the work of the audit firm that issued the
Auxiliary Organization Financial Statements. If KPMG notices an obvious
error, they must question that balance.
43. Does the Pell reclassification impact the Tuition discounting?
 No.
44. If the campus has the non-GAAP accounting policy of a rolling 12 months JuneMay, does it need to be adjusted for GAAP? If it is adjusted this year there will be
13 months of expense, is that okay?
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 The campus should report the correct expenses in the correct period. If
this is adjusted in the current year, it would need to be evaluated for a
prior period impact.
45. How do some of the campuses finish so fast?
 The audit is approached from a project management perspective; a
schedule is drawn up with milestones to mark measurable progress
towards the goal. The campus should also consider approaching the
schedule on a by area basis. For example, on a given area (i.e.
investments), it may be most efficient for the same individual to be
responsible for completing all related items for that particular area at the
same time for the entire process - from the PBC items through the
required footnotes in both the reporting package and the stand-alone
financial statements. Additionally, campuses should plan to have all PBCs
completed at least a week before the auditors come in order to allow
sufficient time to review all their schedules one last time.
46. What is the best approach recommended for providing PBC #130A, with or
without capital expenditures?
 This is up to the campus to evaluate the cost benefit of spending the time
to strip the capital expenses from the file to achieve a smaller sample size
from MUS versus pulling a larger sample population for KPMG to audit
yielded from the use of KSP.
47. What process do you use to identify the fluctuation (cause of the variance) on
the expenditure analytical review?
 First evaluate the amounts year to year to see if the variance is coming
from the GAAP adjustments, the derived balance or both. Drill down into
the detail from there to identify the fluctuation (cause of the variance).
48. Will the CO consider having a weekly instructive/supportive teleconference with
the GAAP coordinators?
 Yes. A schedule of these meetings will be communicated to the campus
GAAP contacts by the Chancellor’s Office.
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