CUAV 2019 APA Update _____________________________________ May 6, - - PowerPoint PPT Presentation

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CUAV 2019 APA Update _____________________________________ May 6, - - PowerPoint PPT Presentation

Aug 11, 2023 49 likes •402 views

CUAV 2019 APA Update _____________________________________ May 6, 2019 Eric Sandridge, Audit Director Auditor of Public Accounts Presentation Objectives Common Findings during Financial Audits Higher Education Legislative Impacts

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CUAV 2019 – APA Update _____________________________________ May 6, 2019 Eric Sandridge, Audit Director Auditor of Public Accounts

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Presentation Objectives

  • Common Findings during Financial Audits
  • Higher Education Legislative Impacts
  • Student Financial Assistance Compliance

Report

  • Higher Education Comparative Report
  • Federal Audit Update
  • Other Office initiatives
  • Stay Awake throughout the presentation

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Higher Education Workplan

  • How many hours does it take us to

complete our Higher Education Workplan?

  • How many higher education related reports

did we issue since the last CUAV update?

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Higher Ed Workplan

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205 580 3,550 3,295 42,755 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 2 4 6 8 10 12 14 16 18 Review Reports Special Reports/Letters NCAA Agreed Upon Procedures Federal Reports Financial Statement Audits

Higher Education Workplan

Hours Reports Released

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Common Audit Findings – Universities

  • What is the number one, most common

audit finding area for Higher Education institutions during fiscal year 2018?

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Common Audit Findings ‐ Universities

Of course ‐ Information Technology!

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University Results – Fiscal Year 2018

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Capital Assets Expenses & Payables Federal Financial Reporting Human Resources & Payroll Information Technology Reconciliations Revenue & Receivables Findings 4 2 18 3 7 27 6 3 Universities 4 2 9 3 6 9 4 3

5 10 15 20 25 30

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University Results – Fiscal Year 2018

  • Now that you’ve seen the results, what was

the most common audit finding during the year?

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University Results – Fiscal Year 2018

  • Trick Question – It’s Improve Enrollment

Reporting Process, related to federal compliance and not information technology.

  • Honorable Mention: Improve Processes for

Employment Eligibility (I‐9 forms)

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University Results – Fiscal Year 2018

  • What do these findings have in common?
  • They’re compliance findings
  • Knowledge of regulations ‐ complexity
  • They require communication between

departments

  • Internal controls over compliance functions

may not be as strongly defined

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Report on NCAA Subsidy Percentage Requirements

  • Initial calculations performed following review of

each institutions fiscal year 2017 NCAA Schedule

  • f Revenues and Expenses
  • All institutions met applicable subsidy percentage

requirements provided in the Code section following exclusion of certain allowable items

  • Second report/letter to be issued in June

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Report on NCAA Subsidy Percentage Requirements

§23.1‐1309 D

Each fiscal year, any percentage increase in the subsidy at an institution that complies with subsection C shall be matched by a like percentage increase in generated revenue, except that each such institution shall utilize a rolling average of the change in generated revenue and student fees over the immediately preceding five years for the purposes of such calculation.

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Report on Implementing JLARC Recommendations

  • Most institutions have completed implementation
  • f the specific JLARC recommendations outlined in

Chapter 836, 2017 Acts of Assembly

  • Work remains in progress for a few institutions,

particularly related to increasing spans of control

  • We plan to issue a follow‐up report/letter during

Summer 2019 to address outstanding items

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Comparative Report on Higher Education

  • How many of you are aware of whether

your institution is performing ratio analysis?

  • Are they using Composite Financial Index

(or some derivation)?

  • How many of you read the APA’s

Comparative Report on Higher Education when it was published last Fall?

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Comparative Report on Higher Education

  • Planned annual report approved by JLARC as part
  • f APA’s workplan
  • Uses ratio analysis to understand differences in

financial activity, performance, and stability

  • Analyzes trends in performance to assess impacts
  • f shifting trends in higher education on

institution finances

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Comparative Report on Higher Education

  • Analysis excludes VCCS
  • For purposes of the report, UVA includes Academic,

Medical Center, and College at Wise divisions

  • VCU excludes VCU Health System Authority as it is

considered a component unit under accounting standards

  • The College of William and Mary includes Richard Bland

College and the Virginia Institute of Marine Science

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Comparative Report on Higher Education

  • Compares institutions in the context of peer

groups

– Highest Research – Higher Research – Master’s and Baccalaureate

  • Financial Resource ratios ‐ Resources available and

how they are used

  • Activity‐Based ratios ‐ Current year

spending/revenue performance

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Comparative Report on Higher Education

  • Financial Resource ratios

– Primary Reserve – Viability – Return on Net Position – Age of Facilities

  • Activity‐Based ratios

– Functional Classification – Net Operating Revenues – Auxiliary Income

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Comparative Report on Higher Education

  • Composite Financial Index

– Weighted combination of Primary Reserve, Viability, Return on Net Position, and Net Operating Revenues ratios – Designed by Prager, Sealy & Co., LLC as a means of providing a total metric by which to gauge institution health and is widely accepted

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Exceeds National Average

Classification Institution FY17 Endowment (in millions)1 Fall 2016 FTE Enrollment2 Endowment per FTE Student Highest Research GMU $ 77.7 29,377 $ 2,645 Highest Research UVA 6,400.0 24,329 263,061 Highest Research VCU 1,840.0 28,496 64,570 Highest Research VT 995.8 33,675 29,571 Higher Research CWM 874.1 8,610 101,521 Higher Research JMU 93.1 20,837 4,468 Higher Research ODU 213.5 20,031 10,658 Master’s and Baccalaureate CNU 24.1 4,986 4,834 Master’s and Baccalaureate LU 51.8 4,705 11,010 Master’s and Baccalaureate NSU 19.5 4,800 4,063 Master’s and Baccalaureate RU 50.1 9,165 5,466 Master’s and Baccalaureate UMW 47.9 4,296 11,150 Master’s and Baccalaureate VMI 435.1 1,953 222,785 Master’s and Baccalaureate VSU 36.1 4,505 8,013

Institution Endowment Data

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Primary Reserve Ratio

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Viability Ratio

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Return on Net Position Ratio

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Age of Facilities Ratio

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Composite Financial Index (CFI)

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Composite Financial Index (CFI) Including Component Units

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Federal Audit Update

  • Latest draft version of the 2019 compliance

supplement includes some interesting changes:

  • “Pick Six” Initiative
  • Reporting results and statistics
  • Securing Student Information

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Cycled Agencies

  • Approximately 70 agencies

– No mandatory annual audit requirement – Generally, do not support the CAFR or Statewide Single Audit of federal funds

  • Beginning with last work plan year, began

new approach for cycled agencies by dividing into two pools based on risk

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Impact of Legislation on Cycled Agencies

  • Acts of Assembly Chapters 57 and 307

– Changed the audit requirement for 16 entities from annual to when determined necessary by the Auditor of Public Accounts – This allows us to use our risk analysis process to determine how often to audit these agencies – Time saved will be shifted to more risky agencies

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Cycled Agencies Pools

Risk Analysis – All Cycled Agencies

Pool I – Low Risk

  • Special Project on

Specific Cycle

  • Annual Project
  • Single Report
  • ICQ

Pool II – High Risk

  • Agency Audit of

Specific Cycle(s)

  • 3 Year Rotation
  • Multiple Reports
  • ICQ

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Cycled Agencies – Internal Control Questionnaire

  • Agency completes questionnaire and

provides supporting documentation

– Covers key internal controls over significant

  • rganization areas
  • APA reviews responses and supporting

documentation to determine nature, timing and extent of additional procedures

  • Includes on‐site visit

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Cycled Agencies – Internal Control Questionnaire

  • Agencies receive a letter summarizing

results

  • Results used in future risk analysis for

determining pools

  • Annually issue a report summarizing results
  • f all ICQs

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Summary of Results – ICQ Process

Page 33 WWW.APA.VIRGINIA.GOV 7 6 3 5 4 6 2 4 6 8 10 12 Policies and Procedures ARMICS Reconciliations Payroll/HR Miscellaneous Information Security Agencies Reviewed Findings

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Statewide Project ‐ Procurement

  • Selected 11 of the smaller agencies to do

detailed testing of procurement

  • Findings included:
  • Ensure Compliance with Prompt Pay (2)
  • Improve Contract Procurement/Management Process (2)
  • Strengthen Controls over SPCC Operations (2)
  • Comply with Competitive Procurement Requirements (1)
  • Establish Clear Contractual Scope of Work (1)
  • Discontinue Disallowed Charge Card Program (1)
  • Evaluate Third‐Party Service Provider Controls (1)

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Questions?

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Eric M. Sandridge, CPA, CISA, CGFM

Director | Higher Education Programs Auditor of Public Accounts | Commonwealth of Virginia 101 North 14th Street, 8th Floor | Richmond, VA 23219 (804) 225‐3350 ext. 342 | eric.sandridge@apa.virginia.gov