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HomeMy WebLinkAboutAudit FY 17-18 PresentationWestlake Academy Board Meeting December 3, 2018 Overview •Introduction •Audit Process •Required Communications •Audit Results •Financial Highlights •New Accounting Pronouncements •Questions 2 3 Introductions 4 Presenting Today John DeBurro, CPA Partner, Assurance Services Engagement partner for the audit 20 years of experience Member of the Government Financial Officers Association (GFOA) Special Review Committee Practice emphasis in auditing and consulting for municipalities, school districts, and nonprofit agencies Remember: Weaver is your auditor all year. We are always available to answer your questions. The Firm of Texas DallasFort Worth Midland Odessa HoustonAustin San Antonio Largest independent CPA firm based in the Southwest 90+ Partners 700 Employees 7 Texas Locations 6 Engagement Leadership John DeBurro Engagement Partner, Assurance Services Ben Cohen Manager, Assurance Services 7 Engagement Team Westlake Academy Ben Cohen, CPA Manager Jacqueline Diaz Senior Associate II Elisa Gilbertson, CPA Data Analytics Consulting John DeBurro, CPA Engagement Partner Audit 8 Audit Process Engagement Timeline 9 Initial Audit Planning Interim Fieldwork Aug 27-31 Final Fieldwork Oct 15 –30 Release Audit Opinion Nov 26 Board Meeting Dec 3 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 •Net pension and OPEB liabilities 10 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 11 Interim fieldwork and risk assessment were performed in August 2018. 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 12 Final fieldwork-performed in October 2018 Procedures included: 13 Auditor Communications for the year ended August 31. 2018 14 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 2018 financial statements has been completed and we have issued an unmodified opinion. 15 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. 16 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. The Academy implemented GASB Statement No. 75, “Accounting and Financial Reporting for Post-Employment Benefits Other Than Pensions” during 2018. As a result, the Academy’s governmental activities’ beginning net position was reduced by $4,480,552, the cumulative effect of implementation of this statement. We noted no transactions entered into by the Academy during the year for which there is a lack of authoritative guidance or consensus. 17 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 the net pension and OPEB liabilities 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. 18 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. 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 All known and likely misstatements identified during the audit, other than those that are trivial, have been communicated to management. Management has deemed the following adjustment immaterial individually and in the aggregate and therefore it has not been reflected in the Academy’s financial statements: $158,182 to reduce lease interest/debt service expense and increase beginning fund balance for the payment that was made in advance in prior year. 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) $8.5 $0.5 FY 2018 General Fund Other Funds Governmental Funds Expenditures for FY 2018 totaled $9.0 million, a $188K or 2.1% increase •Instruction costs increased by $277K over FY17. •Instructional leadership costs decreased by $113K over the previous year. •Debt service costs decreased by $89K. $8.4 $0.4 FY 2017 General Fund Other Funds 24 Financial Highlights Comparison of Governmental Fund Expenditures $5.5 $1.1 $0.7 $0.3 $1.1 $0.1 $0.2 $5.2 $1.2 $0.6 $0.3 $1.1 $0.1 $0.2 $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 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 2018 2017 (2 -year comparison –current year and prior year –in millions) 25 Financial Highlights Comparison of Governmental Revenues by Source Governmental Revenues for FY 2018 totaled $9.2 million, a $538K or 6.2% increase. Increase is primarily attributable to a $614K increase in state program revenues. 19.8% 79.0% 1.2% FY 2018 Revenues Local and intermediate sources State program revenues Federal program revenues 22.0% 76.4% 1.6% FY 2017 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) $1.8 $7.2 $0.1 $1.9 $6.6 $0.1 $- $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 Local and intermediate sources State program revenues Federal program revenues 2018 2017 27 Financial Highlights Fund Balances Governmental Funds’ Fund Balances As of August 31, 2018, the Academy’s governmental funds reported a combined ending fund balance of $1.1million as follows: •General Fund $1,105,605 •Local Grant Fund 4,215 •Other Funds 11,378 $1,121,198 General Fund fund balance increased by $166,334 during the year ended August 31, 2018. The ending balance, $1,121,198, represents 13% of fiscal year 2018 General Fund expenditures. 28 Financial Highlights Budgetary Highlights –General Fund The District had an overall favorable budgetary variance of $143,760 (net change in fund balance): •Actual revenues were $170,557K more than budgeted (approximately 2% variance). •Actual expenditures were over budget by $27K (less than 1% variance). 29 Standards Required to be Implemented in FY2020 Effective for the year ended August 31, 2020 GASB 84 –Fiduciary Activities The primary objective of this Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. 30 Standards Required to be Implemented in FY2021 Effective for the year ended August 31, 2021 GASB 87 –Leases The objective of this Statement is to better meet the information needs of financial statement users by improving accounting and financial reporting for leases by governments. This Statement increases the usefulness of governments’ financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. 31 We appreciate the opportunity to work with Westlake Academy and look forward to our continued relationship. Questions? John DeBurro, CPA | Engagement Partner 972.448.6970 | john.deburro@weaver.com