CCIA Spring 2014 Conference
Understanding Your Audit Report
CCIA Spring 2014 Conference
Understanding
Your Audit Report
Heather McGee Decauwer
Senior Manager, VLS
Patrick Cabildo
Internal Auditor, Chaffey CCD
October 3, 2014
What are all these Standards?
GASB, GAGAS, FASB,
SAS, OMB… Oh My!
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CCIA Spring 2014 Conference
Understanding Your Audit Report
GASB
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GASB
Governmental Accounting Standards Board
- source of generally accepted accounting principles
(GAAP) for state and local governments.
- Accounting and financial reporting standards
designed for the government environment are
essential because governments are fundamentally
different from for-profit businesses. Furthermore, the
information needs of the users of government
financial statements are different from the needs of
the users of private company financial statements.
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CCIA Spring 2014 Conference
Understanding Your Audit Report
FASB
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FASB
Financial Accounting Standards Board
- the designated organization in the private sector for
establishing standards of financial accounting that
govern the preparation of financial reports by
nongovernmental organizations.
- CCD’s follow GASB. College Auxiliaries, including
Foundations, follow FASB.
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CCIA Spring 2014 Conference
Understanding Your Audit Report
GAGAS
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GAGAS
Generally Accepted Government Auditing
Standards
- Also known as Yellowbook
- These standards are for use by auditors of
government entities and entities that receive
government awards and audit organizations
performing GAGAS audits.
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CCIA Spring 2014 Conference
Understanding Your Audit Report
SAS
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SAS
Statement of Auditing Standards
- issued by American Institute of Certified Public
Accountants (AICPA)
- Its mission is to serve the public interest by
developing, updating and communicating
comprehensive standards and practice guidance that
enable practitioners to provide high-quality, objective
audit and attestation services to nonissuers in an
effective and efficient manner.
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CCIA Spring 2014 Conference
Understanding Your Audit Report
CCCCO
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CCCCO
California Community College Chancellor’s Office
- The Fiscal Standards and Information Unit is
responsible for maintaining the budget and accounting
structure and fiscal reporting procedures for the
community colleges.
- The Section also collects and analyzes fiscal
information and prepares reports; monitors changes in
related laws, regulations, generally accepted accounting
principles, and GASB requirements; and monitors and
reports on district compliance with the Fifty Percent Law
and Full-Time/Part-Time Faculty statutes and
regulations.
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CCIA Spring 2014 Conference
Understanding Your Audit Report
CDAM
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CDAM
Contracted District Audit Manual
-This manual applies to annual financial and compliance
audits of community college districts and was
developed to encourage sound fiscal management
practices among community college districts.
-The intent is to promote efficient and effective use of
public funds for education in California by strengthening
fiscal accountability at the district, county and state
levels.
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CCIA Spring 2014 Conference
Understanding Your Audit Report
OMB
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OMB – Office of Management &
Budget
Federal Office of Management and Budget - OMB
Circular A-133 - Audits of States, Local
Governments, and Non-Profit Organizations
- This Circular is issued pursuant to the Single Audit
Act of 1984, P.L. 98-502, and the Single Audit Act
Amendments of 1996, P.L. 104-156.
- It sets forth standards for obtaining consistency and
uniformity among Federal agencies for the audit of
States, local governments, and non-profit
organizations expending Federal awards.
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CCIA Fall 2014 Conference
UNDERSTANDING YOUR AUDIT REPORT & AUDIT PROCESS
AUDIT REPORT SECTION
Independent Auditors’ Report
Provides the auditors’ opinion on the
fairness of the financial statements
prepared by management and whether
the financial statements are prepared in
accordance with generally accepted
accounting principles.
Presented by:
Heather McGee Decauwer, Vicenti, Lloyd & Stutzman LLP
Patrick Cabildo, Chaffey CCD
Standard
DECRIPTION
or Agency
SAS
Two types of opinions:
Unmodified Opinion - the opinion where auditor
expresses that the financial statements are presented, in
all material respects, in accordance with applicable the
financial reporting framework.
Modified Opinion - A qualified opinion, an adverse
opinion, or a disclaimer of opinion. Given when the
auditor
(a) concludes that based on the audit evidence obtained,
the financial statements as a whole are materially
misstated OR
(b) is unable to obtain sufficient appropriate audit
evidence to conclude that the financial statements as a
whole are free from material misstatement.
 Qualified - a. the auditor, having obtained
sufficient appropriate audit evidence, concludes
that misstatements, individually or in the
aggregate, are material but not pervasive* to the
financial statements or b. the auditor is unable to
obtain sufficient appropriate audit evidence on
which to base the opinion, but the auditor
concludes that the possible effects on the
financial statements of undetected misstatements,
if any, could be material but not pervasive.
 Adverse - the auditor, having obtained sufficient
appropriate audit evidence, concludes that
misstatements, individually or in the aggregate,
are both material and pervasive to the financial
statements
 Disclaimer - the auditor, unable to obtain
sufficient appropriate audit evidence on which to
base the opinion, and the auditor concludes that
the possible effects on the financial statements of
undetected misstatements, if any, could be both
material and pervasive.
*pervade – to spread through or throughout
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AUDIT REPORT SECTION
Independent Auditors’ Report
(continued)
Standard
or Agency
DECRIPTION
Opinion letter may include:
 Emphasis of Matter Paragraph - A paragraph
included in the auditor's report that refers to a
matter appropriately presented or disclosed in the
financial statements that, in the auditor's
professional judgment, is of such importance that
it is fundamental to users' understanding of the
financial statements. Examples:
o Going Concern
o Pending Lawsuit
 Other Matters Paragraph- A paragraph included in
the auditor's report that refers to a matter other
than those presented or disclosed in the financial
statements that, in the auditor's professional
judgment, is relevant to users' understanding of
the audit, the auditor's responsibilities, or the
auditor's report. Examples:
o Required Supplementary Information**
o Other Information**
**see examples on page 3
Management’s Discussion and Analysis
Provides a written picture of what the
financial statements communicate to the
readers and users of your audit report.
GASB
34/35
Certain limited procedures are applied by your auditor,
however, this information is unaudited and the auditor
expresses no opinion on it.
GASB
The statement of net position and statement of revenues,
expenses and changes in net position are presented on the
full accrual basis of accounting – including capitalization
and depreciation of fixed assets and the recognition of
long-term debt.
This is a required element under the
GASB 34/35 reporting model.
Basic Financial Statements
Under the GASB 34/35 reporting model,
the financial statements are completely
reconfigured to focus on the District as a
whole without displaying individual fund
information.
A statement of cash flows is also presented.
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AUDIT REPORT SECTION
Footnotes
Standard
or Agency
The footnotes are an integral part of the
GASB
financial statements – the financial
GAAP
statements would be incomplete without
footnotes. The footnotes help to explain
the accounting policies of the District and
give more insight into the numbers
included on the financial statements.
DECRIPTION
Some of the key footnotes are:








Accounting Policies
Deposits & Investments
Capital Assets
Long-term Debt
Retiree Benefits
SERP
Commitments and Contingencies
Subsequent Events

Post-employment health care benefits funding
process
Schedule of employer contributions
Required Supplementary Information
GASB
Required supplementary information
differs from other information outside the
basic financial statements. Certain
agencies considers the information
essential to financial reporting and
because authoritative guidelines for the
measurement and presentation of the
information have been established.

Supplementary Information



CCCCO
Information required by the California
Communication College Chancellor’s
Office (CCCCO) and the Federal Office
of Management and Budget (OMB). The
same audit procedures (unless noted as
unaudited) are applied to this information
as to the general purpose financial
statements.


History & organization (unaudited)
State financial assistance
Workload measures for State general
apportionment
Reconciliation of annual financial and budget
report with audited financial statements
Reconciliation of 50% law
Proposition 30 EPA expenditure report

Expenditures of Federal awards

OMB
Prop 39
Optional (for continuing disclosure requirements)
 Financial trends and analysis
 General fund budget to actual (unaudited)
District
Preference
Optional
 Reconciliation of Governmental Funds to the
Statement of Net Assets
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AUDIT REPORT SECTION
Series of Compliance and Internal
Control Letters Required by the Federal
and State Governments
These letters discuss whether, during the
course of our audit, the auditor noted any
material issues of non-compliance with
local, state or federal laws and/or
regulations; also, whether any internal
control issues were noted regarding the
processing of “on-going” transactions or
transactions related to federal “major”
programs.
Standard
or Agency
DECRIPTION
This section contains three reports.
 The first addresses compliance related to laws,
regulations, grants, etc. and consideration of the
internal controls over financial reporting.
 The second reports on compliance with Federal
grant requirements and internal control over
compliance.
 The third addresses the District’s compliance with
state programs.
GAGAS
OMB
CCCCO
Any reportable conditions are identified in these reports
and the reader is referred to the Findings and Questioned
Costs section.
Findings and Recommendations
This section includes the Federal
required disclosures of OMB Circular A133 as well as other compliance and/or
internal control findings.
This section contains five parts:
GASB
CCCCO
OMB

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


Summary of Auditor Results - required by OMB
Circular A-133 and CCCCO.
Schedule of findings and Questioned Costs
Related to General Purpose Financial Statements –
findings related to internal controls over financial
reporting and compliance with laws and
regulations.
Schedule of Findings and Questioned Costs
Related to Federal Awards
Report on State Compliance – identifies programs
in the Department of Finance’s transmittal of audit
requirements and the determination of reasonable
assurance that the District is in compliance.
Status of Prior Year Finding – This section
provides an update on the findings and
recommendations included in the prior year audit
report
Statistical Information
This information is presented to aid the
District in meeting the bond continuing
disclosure requirements.
Prop 39
Information in the statistical section is presented for
informational purposes and is not audited.
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CCIA Spring 2014 Conference
Understanding Your Audit Report
Contact Information
Heather McGee Decauwer, CPA - Senior Manager
Vicenti, Lloyd & Stutzman LLP
hdecauwer@vlsllp.com
(626)857-7300
Patrick Cabildo, CPA - Internal Auditor
Chaffey Community College District
patrick.cabildo@chaffey.edu
(909)652-6038
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