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Prepared by Client (PBC) List - Part 2

Chapter 9

Presented by KPMG LLP and CSU

KPMG LLP

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The List – Capital Assets

#74 – Capital Asset Rollforward KPMG will test at interim if campus can complete the

rollforward – see #75 below

Interim testing is optional, but encouraged

Rollforward from interim to final is required if tested at interim – see exhibit

Depreciation expense not required to be recorded at interim

#75 – Detail of Capital Asset Additions Two options

Provide by project, then further detail will be requested

Provide all detail initially

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The List – Capital Assets

#75 – Detail of Capital Asset Additions (continued)

List of additions will be required at final if tested at interim – see #74

#81 – Sales (disposals) of Capital Assets Identify where proceeds of sales (if any) are recorded

in legal – may need a GAAP adjustment

NBV of disposed capital assets should agree to Note 5

#82 – CWIP Rollforward Accrue retention, if any – GAAP adjustment to DR

Capital Assets and CR A/P (also, search for unrecorded liabilities)

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The List – Capital Assets

#82 – CWIP Rollforward (continued) Accrue A/P in CSU Funds that will ultimately pay for the

cost (affects your unrestricted vs. restricted net assets)

#83 – Capitalized Interest Separate Training Required on SFAS 62

If an entry is required, must wait for debt passdown entries from Chancellor’s Office – record as a GAAP adjustment

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The List – Other Noncurrent Assets

#85 – Documentation of Realizability Reference GASB Concept Statement No. 4 to ensure

you have a valid and realizable asset

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The List – A/P, ASW and Compensated Absences

#86 – State Payroll File Reconciliation Provide one month as selected by KPMG at interim

and June 2008 at final

#87 – Detail of Employees Using Timecards May be worthwhile to provide list to local KPMG team

prior to arrival if convenient for campus and KPMG

#88 – A/P Leadsheet Ensure you can reconcile between your campus A/P

and the A/R of your auxiliaries

#90 – ASW PIMS H43 or the Chancellor’s Office query may be

used

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The List – A/P, ASW and Compensated Absences

#90 – ASW (continued) SCO Reports like H43 may no longer be available if

your campus has implemented Absence Management

Ensure you accrue for Benefits in Faculty Salary Accrual

Accrue for Faculty Pay for Summer Session earned prior to June 30th

#92 – Compensated Absences Again, SCO Reports may no longer be available –

check with your campus HR personnel

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The List – A/P, ASW and Compensated Absences

#93 – Salary and Benefit Leadsheet Revised format of leadsheet for 07/08 – see Exhibit

#94 – Commitments and Contingencies Should NOT include items already accrued in A/P

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The List – Deferred Revenue

#95 through #97 – Deferred Revenue Reasonableness Test and Schedules

Lily covered at FOA

Separate Task Force addressed issues of KPMG’s difficulty in testing this liability balance

Issue primarily stemmed from the variability in the ways that deferred revenue and summer revenue are recorded from campus to campus

Two standardized schedules created by Steve DeVetter that will support KPMG testing and GAAP adjustment

Review Schedules Think about this from a revenue standpoint

Discuss three inputs

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The List – Deferred Revenue

Review Schedules (continued) Review the formulas on your own

Schedule details what A/R, Deferred Revenue, and Revenue Recognized in the current fiscal year should be

Use for any revenues earned over time (example: housing, parking, etc.)

Ensure large fluctuations are explainable (for example, increase in Fall SUF resulting from bills going out one week earlier than prior year)

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The List – Deferred Revenue

Replace w ith revised schedule that accompanies Chapter 4 section CSU

Deferred Fees Calculation/ Reasonableness Test (Required Format)

6/30/20CY

Registration (B) Collected (C) Revenue to

Recognize (D) Gross AR Gross Deferred

Revenue Reclass Net Deferred

Revenue Net AR Revenue

Recognized

Tuition/Fall Term (undergraduate) < 6 4,000,000$ 2,000,000$ 0% 2,000,000$ 4,000,000$ (2,000,000)$ 2,000,000$ -$ -$

Tuition/Fall Term (undergraduate) > 6 4,000,000$ 1,400,000$ 0% 2,600,000$ 4,000,000$ (2,600,000)$ 1,400,000$ -$ -$

Tuition/Fall Term (post-graduate) < 6 400,000$ 300,000$ 0% 100,000$ 400,000$ (100,000)$ 300,000$ -$ -$

Tuition/Fall Term (post-graduate) > 6 400,000$ 200,000$ 0% 200,000$ 400,000$ (200,000)$ 200,000$ -$ -$

Tuition/Fall Term (teaching credential) 300,000$ 140,000$ 0% 160,000$ 300,000$ (160,000)$ 140,000$ -$ -$

Tuition/Fall Term (non resident) < 6 200,000$ 100,000$ 0% 100,000$ 200,000$ (100,000)$ 100,000$ -$ -$

Tuition/Fall Term (non resident) > 6 200,000$ 100,000$ 0% 100,000$ 200,000$ (100,000)$ 100,000$ -$ -$

Student Union/Fall Term 250,000$ 120,000$ 0% 130,000$ 250,000$ (130,000)$ 120,000$ -$ -$

Health Facilities/Fall Term 23,000$ 10,000$ 0% 13,000$ 23,000$ (13,000)$ 10,000$ -$ -$

Health Services/Fall Term 100,000$ 45,000$ 0% 55,000$ 100,000$ (55,000)$ 45,000$ -$ -$

Total Fall 9,873,000$ 4,415,000$ 0% 5,458,000$ 9,873,000$ (5,458,000)$ 4,415,000$ -$ -$

CERF 1,000,000$ 800,000$ 80% 200,000$ 200,000$ (40,000)$ 160,000$ 160,000$ 800,000$

Summer Session 1 1,000,000$ 800,000$ 100% 200,000$ -$ -$ -$ 200,000$ 1,000,000$

Summer Session 2 1,000,000$ 700,000$ 100% 300,000$ -$ -$ -$ 300,000$ 1,000,000$

Summer Session 3 1,000,000$ 600,000$ 75% 400,000$ 250,000$ (100,000)$ 150,000$ 300,000$ 750,000$

Summer Session 4 1,000,000$ 500,000$ 75% 500,000$ 250,000$ (125,000)$ 125,000$ 375,000$ 750,000$

Summer Session 5 1,000,000$ 100,000$ 0% 900,000$ 1,000,000$ (900,000)$ 100,000$ -$ -$

Total Summer Session 5,000,000$ 2,700,000$ 70% 2,300,000$ 1,500,000$ (1,125,000)$ 375,000$ 1,175,000$ 3,500,000$

Total Student Tuition and Fees 15,873,000$ 7,915,000$ 27% 7,958,000$ 11,573,000$ (6,623,000)$ 4,950,000$ 1,335,000$ 4,300,000$

Housing 400,000$ 200,000$ 0% 200,000$ 400,000$ (200,000)$ 200,000$ -$ -$

Parking 300,000$ 140,000$ 0% 160,000$ 300,000$ (160,000)$ 140,000$ -$ -$

Total Fall 700,000$ 340,000$ 0% 360,000$ 700,000$ (360,000)$ 340,000$ -$ -$

Housing 600,000$ 500,000$ 85% 100,000$ 90,000$ (15,000)$ 75,000$ 85,000$ 510,000$

Parking 500,000$ 400,000$ 85% 100,000$ 75,000$ (15,000)$ 60,000$ 85,000$ 425,000$

Total Summer Session 1,100,000$ 900,000$ 85% 200,000$ 165,000$ (30,000)$ 135,000$ 170,000$ 935,000$

Total Sales & Srvs of Aux Enterprieses 1,800,000$ 1,240,000$ 52% 560,000$ 865,000$ (390,000)$ 475,000$ 170,000$ 935,000$

(A) Whatever the method used by the campus to determine the inputs, campus must provide the basis to the KPMG, and KPMG must be able to follow the logic.

(B) Campus needs to methodically determine the registration for each term. In the absence of information by term, campus may use the aggregate (e.g. Total Summer).

(C) Campus needs to methodically determine the cash collected for each term. In the absence of information by term, campus may use the aggregate.

(D) Campus needs to methodically determine w hat percentage of the revenue w as earned as of 6/30/CY. In the absence of information by term, campus may use the aggregate.

Input (A) Output (Calculated)

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The List – Deferred Revenue

Current: (A) (A)

6/30/20CY 6/30/20PY $ %

GAAP Acct Description Balance Balance Change Change

Deferred income - tuition fees 4,950,000 4,500,000 450,000 10.00%

(Fall, Summer & CERF)

Deferred income - sales & srvs of aux entrp 475,000 450,000 25,000 5.56%

(Fall, Summer)

Deferred income - graduation fees 1,430 1,277 153 11.98%

Deferred income - grants and contracts 297,054 398,065 (101,011) -25.38%

Operating revenue collected in advance 797,654 576,092 221,562 38.46%

712105 Total Deferred Revenue 6,521,138 y 5,925,434 y 595,704 10.05%

y Prior year balance must agree to issued prior year financial statements.

y Amounts must agree to the amounts included on the statement of net assets.

Agrees to net deferred revenue total from Exhibit 12

Noncurrent: (A) (A)

6/30/20CY 6/30/20PY $ %

GAAP Acct Description Balance Balance Change Change

Deferred income - grants and contracts 5,234,091 5,542,198 (308,107) -5.56%

- #DIV/0!

- #DIV/0!

- #DIV/0!

- #DIV/0!

- #DIV/0!

712202 Total Deferred Revenue 5,234,091 y 5,542,198 y (308,107) -5.56%

y Prior year balance must agree to issued prior year financial statements.

y Amounts must agree to the amounts included on the statement of net assets.

(A) If significant fluctuation between years, campus needs to be able to explain why and be prepared to provide supporting documentation, if necessary.

Therefore, it is important that campus takes a snap shot of its student subsystem as of 6/30/CY.

CSU

Sample Deferred Revenue Leadsheet

6/30/20CY

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The List – A Break

Start Your PBC’s Early!!!

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The List – Leases and Long-Term Debt

#104 and #105 – Campus Originated Debt SRB, Senior Debt, and BAN’s excluded

Some campuses continue to have some campus-originated debt (for example, Energy Efficiency Loans)

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The List – Self-Insurance Claims Liability

#108 – Passdown Entry Should not be prepaying premium under RMP

guidelines

Likely will not have a prepaid balance

Discuss CSURMA dividend

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The List – Revenues

KPMG – Various Means of Testing Revenue and Likely Audit Approach

Reasonableness Test

Trend Analysis

Specific Items Detail Testing

Other

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The List – Revenues

#117 – Cash Receipts Control Testing If possible, work with KPMG to select prior to interim

#120 – Tuition and Fee Reasonableness Test No change from prior year

Items #121 – 124 are supporting documentation

#125 – Grants and Contracts Revenue Pell

Cal Grant

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The List – Revenues

#126 – Sales and Service of Auxiliary Enterprises Reasonableness test is more efficient for KPMG and

the campus (in the long run)

Similar to tuition and fees reasonableness test or exhibit

Challenges to reasonableness test – student using housing like a hotel room

May want to break-out nonroutine items (ex. conference revenue)

KPMG – Other testing techniques Include CSU Fund for SRB Audit

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The List – Revenues

#127 – Other Operating Revenues Other operating revenues vs. other nonoperating

revenues GASB #9 – Cash Flows

Certain Object Codes Remapped – RMP

Nonexchange vs. Exchange

Reasonableness test probably not efficient – nonroutine transactions

If one object code is a large portion of total revenue, may consider going another level down for leadsheet

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The List – Revenues

#128 – Other Nonoperating Revenues See discussion above in other operating revenues

#129 - Other Revenues Other Than Other If material, a leadsheet must be provided to KPMG

KPMG is required to test every material SRECNA balance

Sales and services of educational activities – if Athletics is not self-supporting, revenue should be classified here with expenses in student services

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The List – Expenses

Items #130A and 130B Goal – Reduce Sample Size

How It Works Take out capital asset expenses

Reconciliation of total expenses

Item #131 – Auxiliary Enterprise Expense Show variances and have explanation prepared for

material variances