Audit Process and RequirementsOverview

ASTRAMay 17, 2012

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Office of Management Analysis and StandardsMAS

Martin Eckhardt, Director

Delegated Audit Team• Janette Martin, Team Lead–Ginnie Schirmer– Lance Gagelman–Gary Bond–Mark Handshy

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Delegated Audit Team Duties

• Agency Reviews• Review/Approval of Non-Delegated Audit

Transactions• Resource to agencies• Claims– Prior FY– Property Damage/Loss

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History of Delegated Audit

Delegated Audit Authority Fiscal Year Began # Of Participants

Under $500 FY 1995 16

Under $1,000 FY 1998 19

Under $2,000 FY 2001 28

Under $5,000 FY 2004 20

Total Delegated Audit FY 2004 Regents Universities

Under $5,000 FY 2011 All agencies

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Policy vs. Procedure

• SMART & changes to DofA organizational structure created separation of policy and procedures.– Policy• MAS responsibility

– Procedures• SMART team responsibility

– within Office of General Services

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Agency Reviews (Audits)

• Two Review Perspectives Under SMART– MAS • Accounting transactions

– Procurements & Contracts • P-Card transactions

• MAS Agency Reviews – FY 2011 audit year• First year with SMART• 1/3 of agencies in a 3-year cycle

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Agency Reviews

• During FY 2012– Began FY11 agency reviews on Sept. 2, 2011• Started with 3 small agencies to work through our

revised audit plan with SMART

– 23 agency reviews in progress or completed as of May 11, 2012

– Will limit agency reviews during fiscal year end and budget season and work with agencies to continue reviews as schedules allow.

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Agency Review Components

• Random Sample of Agency Transactions– Accounts Payable– Travel & Expense– W-9’s

• Compliance Review of Transactions• Capital Assets• Local Funds• Accounts Receivable

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AR LPA Audit

• Department of Administration(DofA):– To help ensure State agencies are aware of,

implement, and follow Statewide policies for accounts receivable, DofA should:

• Periodically remind all State agencies about the policies to be followed on collection activities, and the availability of the Setoff Program.

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AR LPA Audit

• Department of Administration(DofA):• Periodically provide training, workshops, or other

informational sessions to help State agencies become more familiar and comfortable with proper accounts receivable management.

• Periodically check State agencies’ adherence to the Division’s policies on collection activities.

• Consider reviewing documentation to verify agencies’ reported accounts receivable on a sample basis.

• Encourage agencies to write off debts when they determine that it is doubtful the debts will ever be collected.

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Accounts Receivable • PM 8,001- Management of Receivables

– Agency tracking of Accounts Receivable by either• SMART Accounts Receivable module or• Agency maintained system or file

– Report on DA-32 should include• Amounts due from governmental units• Taxes receivable• Amounts due from other funds - e.g., overpayments owed to a

particular fund by another fund in the same governmental unit for goods sold and services rendered

• Loans receivable• Miscellaneous/Other receivables – e.g., overpayments by an

agency subject to refund, interest and penalties (fines) assessed against an individual or a corporation, etc.

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Accounts Receivable

• PM 8,001- Management of Receivables– Minimum Collection Procedures for A/R

• Collection attempts– Apply when 30 days past due from the date receivable was to

be collected.• Documentation of collection

– For amounts over $25, three collection attempts should be made (a record must be kept for each attempt to collect.)

• If debt is still uncollected– If the payment is 60 days past due, deny further credit.– Should submit the debt to the Setoff Program or write-off

the debt.

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Accounts Receivable

• PM 8,001- Management of Receivables– Minimum Collection Procedures

• Write-off debt when PM 8,001 criteria is met– a valid receivable exists– the receivable is past due– the agency has complied with the minimum collection

procedures.

– If agency elects to not use PM 8,001 and follows an alternative policy instead, that policy should be approved by the Director of MAS.

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Agency Review Components • Desk Audit

– Delegated Audit review (A/P, T&E)– Accounts Receivable– W-9’s– Submit support documents via thumb drive, CD,

scanned sent with e-mail, or paper copy• Do not send information that is in SMART

• On-Site Audit– Capital Assets– Local Funds

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• Authoritative Hierarchy–Statutes (K.S.A.s)–Regulations (K.A.R.s)–Policy (PM)

http://www.da.ks.gov/ar/pm/Default.htm–Informational Circulars

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Compliance Review of Transactions

Agency Reviews

• Agency Preparation for Review– Vouchers in Sample Selection

• Include voucher number on all associated support.– Provide support evidence of receipt of goods or services.– If submitting .pdf file, please have documents in voucher

number order as shown on sample list (file is not searchable.)– Do not send information that is in SMART

• Vouchers created in SMART should contain appropriate information regarding payment. May need additional information from what was included on PO.

– Accounts ReceivableReview PM 8,001 for clear understanding of receivables

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Agency Reviews• Agency Preparation for Review

– Local Funds• Authorized funds maintained at agency level for payments

requiring immediate attention. • Three types of local funds

– Petty Cash (PM 10,752)– Use DA-71 to establish and update

– Change Fund (PM 9,100)– funded through Imprest Fund– Use DA-74 to establish and update

– Check Cashing Change Fund (PM 9,101)– Funded through Benefit or Canteen Funds– Use DA-74A to establish and update

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Agency Reviews• Agency Preparation for Review

– Local Funds• Reconcile local funds as needed, monthly at minimum.• Be sure to update names associated with local funds as they change.• All local funds must be reconciled as of June 30th each year

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Agency Reviews

• Agency Preparation for Review– Inventory

• Agencies need to closely review and update Capital Asset listing.– Review asset disposal in SMART.

• Have agency asset policy updated (PM 13,001) -– Each state agency is responsible for establishing a written

policy for safeguarding financial and physical assets and for being alert to possible exposures, errors and irregularities. The agency policy should cover at the minimum, the responsibility of the property management officer, property criteria, ownership, usage, handling of stolen assets and disposal of property.

– Please provide audit information in timely manner.19

Agency Reviews

• Agencies have two opportunities to respond to audit findings

– Initial findings on audit findings worksheet are provided to agencies electronically or during on-site audits.

– Audit letter response if needed

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Agency Reviews

• As changes in policies are formally communicated to agencies, our goal is to audit for these changes going forward.

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• da.ks.gov/ar/genacct/Audit/Delegated.htm

– Delgated Audit Authority Program Overview– Agency Responsibilities– Accounts and Reports Responsibilities – Delegated Audit Procedures– What can the agency expect during the annual

audit

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Delegated Audit Website

• PM 14,002 – Fiscal Year Closing of Obligations– All interfunds must be processed within the same

fiscal year as initiated.– FY Determination for Expenditure Transactions:• Commodities & Capital Outlay – date order is placed• Credit Card Purchases

– Procurement Cards (P-Cards)• All purchases posted to cardholder accounts on the June P-

card statement are old FY business.• Purchases posted after June statement cutoff through June

30 either old or new FY business – agency option.– Other – date purchase is made

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Fiscal Year End

• PM 14,002 – Fiscal Year Closing of Obligations– FY Determination for Expenditure Transactions:

• Dues, Memberships & Subscriptions – beginning date of membership or subscription period

• Maintenance or Ongoing Service Contracts – beginning date of time period covered by payment

• Other Contractual Services – date services provided• Postage – Payments entered in SMART after 6pm on

June 30 considered new fiscal year business• Professional Services – date services rendered

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Fiscal Year End (cont’d)

• PM 14,002 – Fiscal Year Closing of Obligations– FY Determination for Expenditure Transactions:• Projects – beginning date of project• Rental of Equipment – ending date of agreement;

payments made according to terms of agreement• Rental of Space in Buildings/Lease of Land – beginning

date of time period covered by payment; payments made according to terms of

lease agreement• Repairing & Servicing of Buildings/Equipment –

completion date of job

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Fiscal Year End (cont’d)

• PM 14,002 – Fiscal Year Closing of Obligations– FY Determination for Expenditure Transactions:• Salaries & Wages – date payment is made (pay date)• Telephone/Copiers – determined by method of billing

– If vendor bills before service is received, begin. date of service– If vendor bills after service is received, ending date of service

• Travel– Date the segment of travel took place– If consecutive travel begins in old FY and ends in new FY, the

entire cost may be charged to the new FY

• Tuition – beginning date of service• Utilities – ending date of service

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Fiscal Year End (cont’d)

Contact Information• SMART Technical Questions– Submit Help Desk ticket

• Policy Questions– Email or Call Delegated Audit Team

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Janette MartinGary BondMark HandshyGinnie SchirmerLance Gagelman

Martin Eckhardt

Janette.Martin@da.ks.gov Gary.Bond@da.ks.gov Mark.Handshy@da.ks.gov Ginnie.Schirmer@da.ks.gov Lance.Gagelman@da.ks.gov

Martin.Eckhardt@da.ks.gov

785-296-2708785-296-7217785-296-4799785-296-7021785-296-2255

785-296-2661

Questions ?

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