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Audit and Fiscal Oversight Responsibilities VAVRINEK, TRINE, DAY & CO., LLP December 15,2010 An annual financial statement and compliance audit of California Community College Districts is required by: California Education Code: Section 84040 (b) District Board Approved Policies State Chancellor’s Office: Contracted District Audit Manual Federal Single Audit Compliance Regulations: Office of Management and Budget Circular A-133 Audits of States, Local Governments and Non-Profit Organizations Guidance for audit procedures is provided by Government Auditing Standards issued by the Comptroller General of the United States, Statements on Audit Standards issued by the American Institute of Certified Public Accountants Contracted District Audit Manual issued by the California State Chancellor’s Office Establish a system of sound internal controls to ensure compliance with internal policies, fiscal standards and regulatory compliance requirements. Establish a system of monitoring and oversight to ensure internal controls are functioning . Communicate throughout the organization a tone of fiscal responsibility, compliance with laws and regulations and compliance with the established procedures. Communicate with the auditors any known deviations resulting in noncompliance. District is responsible for compliance with established procedures whether or not the Auditors identify the procedure as subject to testing. Create an open line of communication throughout the District to ensure compliance: Individuals should report to their Department Head or Dean Department Head or Dean should report to the appropriate Vice President Vice Presidents should report and communicate with the Executive Cabinet and establish internal corrective action plans. Communicate uncorrected deficiencies to the Auditors Compliance with Laws and Regulations The District Administers over $30 million in Federal Grants and Programs Each Program may report to a Different Agency Department of Education Department of Labor Department of Health and Human Services Department of Agriculture Purpose is to provide transparency as to the use of the money and accountability for the program dollars spent Allowable Activities Reporting Requirements Eligibility of the recipients for the program services Tracking of Personnel Costs Monitoring Cash Management Questioned areas within past audits: Timely Reporting of Program Activity Equipment Management Student Financial Aid Eligibility Student Financial Aid Verification Monitoring of Subrecipients Time and Effort Reporting Required of all District employees working within a specific program or multiple programs. Annual certification for those employees charged to only one grant. Periodic certification through detail time cards for hourly and/or multi funded employees Discussions with Board, Management and Staff Required by Statement on Audit Standards No. 99 Open, honest discussion at all levels of the organization to enable the auditors to focus audit procedures on highest risk areas Can you think of how people might commit fraud in the organization? Is there someone else I should talk to regarding potential fraud? Have you become aware of any fraudulent practices within the organization? Are you able to bring your concerns to the attention of someone in management without fear of retribution? Discussions of potential fraud may also lead to potential compliance deficiencies as well as internal control deficiencies What is Fraud? Fraud is commonly understood as dishonesty calculated for advantage. Mis-reporting an event Mis-use of time Converting District assets (cash or materials) to personal use Based upon the results of discussions, testing takes place. Other controls may be in place The individual may not understand the procedure The auditors are not out to ‘get’ any individual or program Reporting of the results of testing Area management Fiscal Services President Board of Trustees Provides the framework to ensure compliance with all regulations as well as internal polices Provides a system of monitoring and oversight Communicates throughout the Organization a tone of Accountability, Fiscal Responsibility and Compliance with laws and regulations Within the Colleges College Business Offices Program Managers Deans College Presidents Within the District Office Business Services Payroll Human Resources Information Systems Warehouse Student Services Student Financial Aid International Students Within the District Office Vice Presidents Internal Audit Chancellor Audit Committee Board of Trustees The District’s requirement to maintain compliance with the Federal, State and Board regulations is not dependent upon the Auditor’s procedures within any one year. Audit procedures are designed to report back to the District management and the Board the continued efforts of the Colleges and Departments to maintain compliance We are reporting “after the fact” - if compliance is not maintained it is reported June 30, 2009 Audit Report was issued August 5, 2010. There are 15 Material Weaknesses related to the financial statements There are 15 Significant Deficiencies related to the financial statements There are 13 findings related to Federal Compliance – 4 Material weaknesses and 9 Significant Deficiencies There are 8 State Compliance Findings Many of these have been repeat findings from prior years’ audits It is the responsibility of the District the Colleges and everyone within the District to work to resolve these issues December 2010 Completion of the 2009-10 Annual Audit Report Review Draft Audit Report with Management, the Chancellor and the Audit and Finance Committee Submit the 2009-10 Annual Audit Report to the State Chancellor’s Office and Federal Oversight Agencies January 2010 Present the finalized Annual Audit Report to the Board of Trustees Any Questions???