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Home My WebLink AboutAcademy Audit presentationWestlake Academy Board Meeting January 9, 2017 Overview •Introduction •Audit Process •Required Communications •Audit Results •Financial Highlights •New Accounting Pronouncements •Questions 2 3 Introductions The Firm of Texas Weaver is the largest independent accounting firm based in Texas and the Southwest. We’ve served Texas public sector entities for 66 years. REGIONAL AND NATIONAL RANKINGS Largest Firm based in the Southwest Region of the U.S. | Accounting Today (2016) #4 National Leaders in Tax (firms under $100M)| Accounting Today (2016) Top 40 Firms | INSIDE Public Accounting (2015) Top 50 Firms | Accounting Today (2016) 2015 BEST of the BEST Firm to Watch | INSIDE Public Accounting #9 Largest Houston-Area Accounting Firms: Global Revenue | Houston Business Journal (2016) #8 Largest North Texas Accounting Firms | Dallas Business Journal (2016) #3 Largest Tarrant County Accounting Firms | Fort Worth Business Press (2015) #7 Largest San Antonio Accounting Firms | San Antonio Business Journal (2016) Best and Brightest Companies to Work For®| Dallas/Fort Worth (2016) and Houston (2015) 5 Engagement Leadership John DeBurro Engagement Partner, Assurance Services Jerry Gaither Partner, Assurance Services 6 Engagement Team Westlake Academy John DeBurro, CPA Engagement Partner Tish Smith Audit Senior I Tom Winson, CPA Advisory Services -ACL Data Specialist Consulting Jerry Gaither, CPA Public Sector Leader Audit 7 Audit Process Engagement Timeline 8 Initial Audit Planning Interim Fieldwork Aug 1-5 Final Fieldwork Oct 17 –28 Release Audit Opinion Jan 3 Board Meeting Jan 9 Discuss Developments/ Issues Continuous Communication Audit Process •The audit was performed in accordance with Generally Accepted Auditing Standards (GAAS) and Generally Accepted Government Auditing Standards (GAGAS) •The audit process was a risk-based approach in which we identified potential areas of risk that could lead to material misstatement of the financial statements. We tailored our audit programs and resources to specifically address the following areas of risk: •State Foundation School Program revenue •State and local grant revenues •Payroll and payroll related liabilities •Cash disbursements and related payables 9 Audit Process •Walkthrough of accounting controls over significant transaction cycles: •Budget •Purchasing and Accounts Payable •Payroll •Revenue •Test of internal controls: •Cash disbursements •Payroll •Test of compliance •PFIA (Public Funds Investment Act) •State Compliance Requirements 10 Interim fieldwork and risk assessment were performed in August 2016. Procedures included: Audit Process •Testing of significant account balances using a combination of vouching of material transactions, sampling transactions and applying analytical procedures •Assisting with the preparation of the financial statements 11 Final fieldwork-performed in October 2016 Procedures included: 12 Auditor Communications for the year ended August 31. 2016 13 Required Communications to Those in Charge of Governance Communication Results Auditor’s responsibility under generally accepted auditing standards (GAAS) The financial statements are the responsibility of the Academy. Our audit was designed in accordance with GAAS in the U.S. and provide for reasonable rather than absolute assurance that the financial statements are free of material misstatement. Our responsibility is to express an opinion about whether the financial statements prepared by management with your oversight are fairly presented , in all material respects, in conformity with U.S. generally accepted accounting principles. Our audit of the financial statements does not relieve you or management of your responsibilities. The audit of the fiscal year 2016 financial statements has been completed and we have issued an unmodified opinion. 14 Required Communications to Those in Charge of Governance Communication Results Auditor’s Responsibility under Government Auditing Standards In addition to the GAAS responsibilities, we are required to issue a written report on our consideration of internal controls and identify significant deficiencies, including material weaknesses, if any. Our reports do not provide assurance on internal controls. We design our audit to provide reasonable assurance of detecting material misstatements resulting from noncompliance with provisions of contracts or grant agreements that have a direct or material effect on the financial statements. We issue a written report on the results of these procedures; however, our report does not express an opinion on compliance. No findings noted. 15 Required Communications to Those in Charge of Governance Communication Results Unusual transactions and the adoption of new accounting principles The significant accounting policies used by the Academy are described in Note 1 to the basic financial statements. New GASB pronouncements implemented in 2016 include GASB Statement No. 72,“Fair Value Measurement and Application” which expands disclosure requirements related to fair value measurements of the Academy’s investments. We noted no transactions entered into by the Academy during the year for which there is a lack of authoritative guidance or consensus. 16 Required Communications to Those in Charge of Governance Communication Results Fraud and illegal acts No fraud, irregularities, or illegal acts were noted. Material weakness in internal control No material weaknesses noted. Other information contained in documents containing audited financial statements We performed limited procedures on the MD&A and RSI. We did not provide any assurance on this information. Management judgments and accounting estimates Management’s estimates of state foundation revenue and net pension liability were evaluated and determined to be reasonable in relation to the financial statements as a whole. Management representations We have requested certain representations from management that were included in the management representation letter. 17 Required Communications to Those in Charge of Governance Communication Results Difficulties encountered No significant difficulties were encountered during our audit. Management consultations We are not aware of management consulting with other accountants for a second opinion. Auditor independence No independence issues noted. 18 Required Communications to Those in Charge of Governance Communication Results Disagreements with Management There were no disagreements with management during the current year. 19 Required Communications to Those in Charge of Governance Communication Results Audit adjustments Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. There were no uncorrected misstatements discovered as a result of our audit procedures. Additionally, no material adjustments have been posted as a result of our audit. Other material written communications between Weaver and Tidwell, L.L.P., and the Academy Nothing to note. 20 Auditor Results Auditor Results •We have issued the Independent Auditor’s Report on the financial statements –Unmodified opinion •We have issued the Independent Auditor’s Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards –No findings noted. 21 22 Financial Highlights 23 Financial Highlights Comparison of Governmental Funds Expenditures by Fund (in millions of dollars) $8.8 $0.5 FY 2016 General Fund Other Funds Governmental Funds Expenditures for FY 2016 totaled $9.3million, a $1.4 million or 18% increase •Instruction costs increased $1.04 million over FY15. •School Leadership increased by $173K over the previous year. •Data processing services increased by $64K. $7.4 $0.5 FY 2015 General Fund Other Funds 24 Financial Highlights Comparison of Governmental Fund Expenditures $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 Instruction, Curriculum, and Media Services Instructional and School Leadership Student Support, Food Svs, and ExtraCurricular Activities General Administration Facilities Maintenance and Data Processing Community Services Debt service 2016 2015 25 Financial Highlights Comparison of Governmental Revenues by Source Governmental Revenues for FY 2016 totaled $8.26 million, a $273K or 3% decrease. Decrease is primarily attributable to a current year decrease in local grants/contributions. 19.5% 79.3% 1.2% FY 2016 Revenues Local and intermediate sources State program revenues Federal program revenues 25.7% 72.5% 1.8% FY 2015 Revenues Local and intermediate sources State program revenues Federal program revenues 26 Financial Highlights Comparison of Governmental Revenues by Source (2 -year comparison –current year and prior year –in millions) $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 Local and intermediate sources State program revenues Federal program revenues 2016 2015 27 Financial Highlights Fund Balances Governmental Funds’ Fund Balances As of August 31, 2016, the Academy’s governmental funds reported a combined ending fund balance of $1.2 million as follows: •General Fund $1,071,036 •Other Funds 87,726 $1,158,762 General Fund fund balance decreased by $514,950 during the year ended August 31, 2016. The ending balance, $1,158,762, represents 12% of fiscal year 2016 General Fund expenditures. 28 Financial Highlights Budgetary Highlights –General Fund The District had a unfavorable budget variance of $46K net change in fund balance: •Actual revenues were $88K less than budgeted (approximately1% variance). •Actual expenditures were below budget by $49K (approximately 0.5% variance). 29 Standards Required to be Implemented in FY2017 Effective for the year ended August 31, 2017 GASB 77 –Tax Abatements •Objective: to require governments that enter into tax abatement agreements to disclose certain information about tax abatement programs that reduce the reporting government’s tax revenues. •Effect: it does not appear that GASB 77 will have a significant effect on the Academy’s financial reporting. GASB 82 –Pension Issues –an Amendment of GASB Statement No.s 67, 68 and 73 •Objective: to address certain issues that have been raised with respect to GASB Statements 67, 68 and 73. •Effect: GASB 82 will not have a significant effect on the Academy’s financial reporting. 30 We appreciate the opportunity to work with Westlake Academy and look forward to our continued relationship. Questions? Jerry Gaither, CPA, CGFM | Partner 972.448.6918| jerry.gaither@weaver.com John DeBurro, CPA | Engagement Partner 972.448.6970 | john.deburro@weaver.com