Documenting Internal Controls: Equipment and Asset Management Financial Reporting Issues 2006 Intern

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Documenting Internal ControlsEquipment and
Asset ManagementFinancial Reporting Issues2006
Internal Control Conference

• NYS OFFICE OF THE COMPTROLLER
• September 18, 2006
• David Hasso CPA, CGFM
• Assistant Director
• Bureau of Financial Reporting

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Financial Reporting Internal Control Failures

• most large internal control failures have
  involved financial reporting
• Enron
• WorldCom
• Parmalat

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Financial Reporting Internal Control Failures -
Capital Asset Issues

• capitalization of expenses
• misrepresentation of capital asset values
• presentation of nonexistent capital assets and
  inventories

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Capital Asset Reporting

• accurate Capital Asset reporting is critical to
• private sector companies
• governments
• not-for-profits

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Capital Asset Reporting

• Capital Asset reporting process
• agencies acquire/dispose of assets
• agencies report asset change information to OGS
• OGS reports asset information to OSC for
  inclusion in various reports
• external auditors validate and confirm
  information
• agency representation letters relative to Capital
  Assets signed by Commissioners

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Capital Asset Reporting

• accurate Capital Asset reporting is important
  because
• accurate financial reporting
• control purposes
• significant amounts
• collateral for debt service

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Capital Asset Reporting

• Capital Asset reporting overview
• valued at historic cost
• depreciated
• infrastructure
• modified approach
• audited by external auditors

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Capital Asset Reporting Values

• Reported New York State Capital Assets

Amounts in billions
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GASB 34 - 2003

• increased emphasis on financial condition and
  controls
• long-term focus on financial operations
• increased control over capital assets
• use of dual presentation
• accrual basis of accounting

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Why did we have to implement GASB 34?

• GAAP F/S are important because
• compliance with NYS law requiring GAAP financial
  statements
• issuance of debt-bond covenants
• Federal Single Audit Act
• better presentation of States financial position
• agency representation letters

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What can agencies do to enhance Capital Asset
internal controls?

• Agency Accountability
• recognize that Capital Assets are important
• instill a sense of this importance to other staff
  at your agencies
• dedicate staff to focus on Capital Asset issues
  and accountability
• from an internal control standpoint, ensure that
  Capital Asset records are up to date and accurate
• OGS, OSC SAB and external auditors will review
  this area to ensure accuracy
• agency representation letters

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Summary

• internal controls over Capital Asset reporting
  are critical because
• significant value to entity
• secure the asset from theft, destruction, etc.
• important to know
• is reported value accurate?
• determine depreciation
• location
• appropriate use?
• are controls over assets in place?
• is asset impaired?
• is asset needed or can it be surplused or sold?

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Bureau of Financial Reporting

• Questions?????
• Contact Dave Hasso
• 518/486-1233
• dhasso_at_osc.state.ny.us