Audit and Fiscal Oversight Responsibilities

Peralta Community College District

VAVRINEK, TRINE, DAY & CO., LLPDecember 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 PoliciesState Chancellor’s Office: Contracted District

Audit ManualFederal Single Audit Compliance Regulations:

Office of Management and Budget Circular A-133 Audits of States, Local Governments and Non-Profit Organizations

Audit Responsibilities Overview

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

Audit Responsibilities Overview

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.

Responsibility of the District

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

DeanDepartment Head or Dean should report to the

appropriate Vice PresidentVice Presidents should report and communicate with the

Executive Cabinet and establish internal corrective action plans.

Communicate uncorrected deficiencies to the Auditors

Responsibility of the District

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

Requirements of OMB A-133

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

Requirements of OMB A-133

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

Requirements of OMB A-133

Discussions with Board, Management and StaffRequired by Statement on Audit Standards No.

99Open, honest discussion at all levels of the

organization to enable the auditors to focus audit procedures on highest risk areasCan 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?

Gathering of Audit Evidence

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 eventMis-use of timeConverting District assets (cash or materials) to

personal use

Gathering of Audit Evidence

Based upon the results of discussions, testing takes place.Other controls may be in placeThe individual may not understand the

procedureThe auditors are not out to ‘get’ any individual

or programReporting of the results of testing

Area managementFiscal ServicesPresidentBoard of Trustees

Auditor’s Response

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

Internal Controls

Within the Colleges

College Business Offices

Program Managers

Deans

College Presidents

Communication and Coordination

Within the District Office

Business Services

Payroll

Human Resources

Information Systems

Warehouse

Student Services

Student Financial Aid

International Students

Communication and Coordination

Within the District Office

Vice Presidents

Internal Audit

Chancellor

Audit Committee

Board of Trustees

Communication and Coordination

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

Auditor’s Role in Compliance

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

Corrective Action Plan

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

Corrective Action Plan

December 2010Completion of the 2009-10 Annual Audit ReportReview 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 2010Present the finalized Annual Audit Report to

the Board of Trustees

Audit Plan for 2009-10 Year End

Any Questions???

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