CSDA Annual Conference

1

• CSDA Annual Conference
• Managing District Finances
• Technology Does Matter
• September 23, 2008

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Introduction
Justin J. Williams, CPA Partner Dustin Cassady
Senior Accountant
Mission Statement To provide responsive,
innovative services of the highest quality to our
clients and to provide a positive, rewarding
environment encouraging our employees to fulfill
their professional and personal goals.
Sacramento Office 2515 Venture Oaks, Suite
135 Sacramento, CA 95833 Tel [phone] Fax
[phone] www.muncpas.com
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Overview

• Using technology to improve your Districts
  financial reporting from an auditors point of
  view

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Presentation Topics

• New Audit Standards
• Computer Security
• Financial Reporting
• Other Ways to Increase Efficiency

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Audit Standards

• New Audit Standards issued by the American
  Institute of Certified Public Accountants

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Audit Standards

• What are some of the new audit standards?
• SAS No. 112
• SAS No. 104 through No. 111
• SAS No. 114

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Audit Standards

• SAS No. 112, Communicating Internal Control
  Related Matters Identified in an Audit
• SAS No. 104 through No. 111, The Risk Assessment
  Standards
• SAS No. 114, Auditors Communication with Those
  Charged with Governance

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Audit StandardsSAS No. 112

• SAS No. 112, Communicating Internal Control
  Related Matters Identified in an Audit
• Effective for periods ending on or after December
  15, 2006.
• Requires written communication of significant
  deficiencies and material weaknesses to
  management and those charged with governance.

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Audit StandardsSAS No. 112

• 3 Levels of Control Related Matters
• Control Deficiency
• Significant Deficiency
• Material Weakness
• Which is the most severe?

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Audit StandardsSAS No. 112

• Other information from SAS 112
• The auditor cannot be part of the clients system
  of internal control.
• Internal control over financial reporting
  encompasses controls over the preparation of the
  financial statements and notes.

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Audit StandardsSAS No. 112

• How do we avoid significant deficiencies and
  material weaknesses?
• Ensure proper controls are implemented and are
  operating effectively
• Review prior year management letters and SAS 112
  letters to ensure recommendations have been
  implemented
• Talk to your auditor

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Computer Security

• Section 2- Computer Security
• Internal Control Objectives
• Sample Controls

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Computer Security

• Internal Control Objectives
• IT strategic planning and risk management process
• Reliable systems that include appropriate data
  backup and recovery processes

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Computer Security

• Internal Control Objectives (cont.)
• Physical security and access to programs and data
  are appropriately controlled
• Program changes and systems acquisition and
  development are appropriately managed

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Computer Security- Internal Control Objectives

• IT Strategic Planning and Risk Management Process
• Does a Technology Plan Exist?
• Does it Support the Entities Financial Reporting
  Requirements?

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Computer Security- Internal Control Objectives

• Reliable Systems That Include Appropriate Data
  Backup and Recovery Processes
• Backups performed and secured
• File Servers and Application Data
• Environmental controls exist
• Fire/Smoke Detection
• Temperature/Humidity Controls
• Backup Power Supply

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Computer Security- Internal Control Objectives

• Physical security and access to programs and data
  are appropriately controlled
• Timely action relating to user accounts
• Requesting, establishing, issuing, suspending,
  modifying, and closing
• Appropriate IT segregation of duties
• IT personnel do not have transaction and
  accounting duties

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Computer Security- Internal Control Objectives

• Physical security and access to programs and data
  are appropriately controlled (cont.)
• Database access is appropriately restricted
• Procedures to maintain effectiveness of
  authentication and access
• Password length, password history, password
  expiration, and lockout for failed attempts

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Computer Security- Internal Control Objectives

• Physical security and access to programs and data
  are appropriately controlled (cont.)
• Physical access to computer room
• Controls over perimeter and network
• Firewalls, routers, terminal service devices,
  wireless security

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Computer Security- Internal Control Objectives

• Program changes and systems acquisition and
  development are appropriately managed
• Application, database, and operating system
  changes tracked
• Application controls considered and documented
  during implementation of new information systems

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Computer Security

• Questions?

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Financial Reporting

• Section 3- Financial Reporting
• Financial Closing and Reporting
• Capturing and Processing Non-Routine Information
• Preparing and Reviewing Financial Statements and
  Disclosures

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Financial Reporting- Financial Closing and
Reporting

• Discussion Question
• Time to close the books.
• Where do you start?

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Financial Reporting- Financial Closing and
Reporting

• Tips/Procedures for a Successful Close
• Have a documented period close process with
  timing and assigned tasks
• Non-routine events or transactions should be
  documented with supporting analysis or
  documentation as they occur

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Financial Reporting- Financial Closing and
Reporting

• Tips/Procedures for a Successful Close (cont)
• Ensure all journal entries have adequate
  supporting documentation
• Review prior year ending trial balance for
  significant variances to ensure all items
  captured
• Review prior year closing journal entries and
  auditors adjusting entries

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Financial Reporting- Non-Routine Information

• Improper recording of non-routine transactions is
  responsible for the majority of audit adjustments

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Financial Reporting- Non-Routine Information

• Examples of non-routine transactions
• Depreciation
• Debt issuances
• Capital Leases
• Fixed asset additions/disposals
• Allowance for bad debt

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Financial Reporting- Non-Routine Information

• Sources of information used to capture
  non-routine transactions
• Board minutes and board resolutions
• Budget to actual comparisons
• Prior year journal entries
• Discussions with department managers

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Financial Reporting Preparing and Reviewing
Financial Statements

• SAS 112
• Auditor cannot be part of entitys internal
  controls
• This includes controls over financial reporting
• So does that mean the Districts have to prepare
  their own financial statements?

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Financial Reporting Preparing and Reviewing
Financial Statements

• Gathering information for financial statements
• Disclosure checklist
• Ask your auditor for a copy
• Review of prior year audited financials
• Examples of common disclosures
• PERS and other Retirement Plans
• Operating Leases
• Subsequent Events

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Financial Reporting

• Questions?

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Other Ways to Increase Efficiency

• Email and Calendar
• Hardware
• Moving Away From Paper

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Other Ways to Increase Efficiency

• Email and Calendar
• Spam Filtering
• Turn off new mail alerts
• Set specific times to check emails
• Recurring and Assigning of Tasks
• Calendar Sharing
• Search Utilities
• Google Desktop

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Other Ways to Increase Efficiency

• Hardware
• Dual Monitors
• PDAs, Smartphones
• Specialized Devices
• Wireless meter readers
• In-office barcode scanners

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Other Ways to Increase Efficiency

• Moving Away from Paper
• Document Management Systems
• PDF instead of Fax
• www.pdf995.com
• www.efax.com

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Questions?
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Resources and Links

• AICPA Governmental Audit Quality Center
• http//gaqc.aicpa.org
• FASB Statements
• www.fasb.org/st
• GASB Statements
• www.gasb.org
• AICPA Statement of Auditing Standards
• http//www.aicpa.org/ProfessionalResources/Accoun
  tingandAuditing/AuditandAttestStandards/
• CSDA
• http//www.csda.net

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Contact Info
Justin J. Williams, CPA Partner jjw_at_muncpas.com
Dustin Cassady Senior Accountant dsc_at_muncpas.co
m
Mission Statement To provide responsive,
innovative services of the highest quality to our
clients and to provide a positive, rewarding
environment encouraging our employees to fulfill
their professional and personal goals.
Sacramento Office 2515 Venture Oaks, Suite
135 Sacramento, CA 95833 Tel [phone] Fax
[phone] www.muncpas.com