APA Update CUAV Annual Conference - - PowerPoint PPT Presentation

APA Update

CUAV Annual Conference _____________________________________ April 25, 2016 Martha S. Mavredes Auditor of Public Accounts

Discussion Areas

• Implementation of GASB 68
• Changes to NCAA Agreed Upon Procedures
• 2015 General Assembly Session
• 2016 General Assembly Session
• Results of FY2015 audits
• Upcoming changes to audits of SFA/R&D
• Upcoming changes for Fiduciary Activities

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IMPLEMENTATION OF GASB 68

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Implementation of GASB 68

• APA audited GASB 68 Schedules for VRS,

SPORS, JRS, and VaLORS

– Only reports on our website for Teachers, Political Subdivisions and entities in the State plan that have a CPA firm auditing their financial statements

• APA issued an attestation report on

management’s assertions regarding the census data

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myVRS Navigator

• Integrated System intended to manage employee

data and calculate VRS benefits

• Business rules facilitate determination of VRS

benefits

• Driven by HR transactions
• Manages member accounts and benefits for

>300,000 members at >1,000 employers participating in 4 pension plans and 4 other employee benefit plans

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myVRS Navigator Data Flow

– New hire keyed into the HR system

• The HR system may interface with the payroll system, but

some agencies may have to dual key

– The changes are either keyed into myVRS Navigator or the agency uploads through a batch file – myVRS Navigator generates a bill each month following the contribution confirmation

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Reconciliation Required

• Purpose: to ensure data is properly

reflected in myVRS Navigator for administration of VRS benefits

– Reconcile myVRS Navigator contributions due to contributions charged in payroll system – Reconciliation process may differ based upon the size and complexity of the employer

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Decentralized Agencies

Batch

• Monthly: submit a file with new

enrollments and data changes for existing members

Online

• Manually update changes in

myVRS Navigator as required by the agency’s internal policies and procedures

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Official Systems of Authority

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myVRS Navigator Payroll System Human Resource System

Reconciliation Steps

• The myVRS Navigator precertification

process requires two parts

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• Review changes
• Ensure changes are

accurate

Review the Snapshot

• Contributions
• Benefit plan withholdings

Reconcile Payroll Information

Part 1

• Generate the Snapshot

– Agencies can drill down through the myVRS Navigator application to review the data – Option to download to excel and review all employees – Option to review changes only

• The snapshot includes the totals for the plan(s)

– Agencies may participate in more than one plan; consider each plan (VRS & VaLORS)

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Part 2

• Consider payroll after gaining an

understanding of HR and myVRS Navigator

– Payroll must be reconciled with myVRS Navigator – Remember: myVRS Navigator processing frequency is monthly and payroll processing frequency varies

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Contribution Confirmation: Payment

• VRS must receive the payment by the 10th of the

subsequent month

• Methods of Payment

– ACH Debit (preferred) – ACH Credit – CIPPS

• Payment is immediately scheduled following

confirmation

– Generally ACH Credit has a longer processing time compared to ACH Debit

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Contribution Confirmation: Concepts Receipt of the best data possible by the due date

– Does not mean perfect data – Some member records require correction through data fix requests

• Employer should not hold confirmation until records

are corrected

• Corrections will be retro-active to origination when

completed

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Access

• Role security was designed and established

to accommodate organization of various size and complexity

• Only mandatory roles

– Primary Administrative Authority (PAA) – VRS Administrator – Security Administrator (SA)

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Census Data

• Group 1

– SSN, Name, Date of Birth, Gender

• Group 2

– Organization Name, Employment Status, Start Date, End Date, Job Name – Creditable Compensation, Service Credit, Contributions

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CHANGES TO NCAA AGREED UPON PROCEDURES

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NCAA Agreed Upon Procedures

• What Hasn’t Changed

– Due January 15th each year – All Division I institutions, Division II institutions

• nce every three years

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NCAA Agreed Upon Procedures

• What Has Changed?

– New line items and new definitions for existing line items – Additional information added to supplement the Schedule – New reporting requirements (will show certain line item variance explanations in AUP report) – Materiality thresholds

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GENERAL ASSEMBLY SESSIONS

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2015 General Assembly Session HB 1897 HB 1897

• Requires a standardized reporting

framework for Athletics revenues and expenses

• Requires institutions to maintain subsidy

percentage below a certain level

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Subsidy Percentage

• Subsidy Percentage represents the portion
• f institutional funding/student fees

allocated for athletics as a percentage of total athletics revenue

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What are the percentages?

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When is this effective?

• We will begin to report on subsidy

percentages for the fiscal year ended June 30, 2017

• The NCAA Reporting Framework used to

ensure consistent calculation is published

• n the APA website

http://www.apa.virginia.gov/reports/NCAA Financial Reporting Guidance.pdf http://www.apa.virginia.gov/reports/NCAA Schedule Template Formatted.xlsx

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NCAA Reporting Framework

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When will we audit/report?

• No change for Division I institutions
• Division II institutions each year during

financial statement

– Once out of every three years will be performed in Fall for reporting before January 15th deadline

• Division III institutions each year during

financial statement audit

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2015 General Assembly Session

§ 4-9.04 IMPLEMENT JLARC RECOMMENDATIONS

Effective Date

• Institutions are not required to follow all

recommended guidance for FY15

• Institutions should follow guidance for FY16

as a trial run for FY17

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2015 General Assembly Session, continued

§ 4-9.04 IMPLEMENT JLARC RECOMMENDATIONS

• a. The Boards of Visitors at each Virginia public four-year higher education institution, to the

extent practicable, shall:

• 1. require their institutions to clearly list the amount of the athletic fee on their website's

tuition and fees information page. The page should include a link to the State Council of Higher Education for Virginia's tuition and fee information. The boards should consider requiring institutions to list the major components of all mandatory fees, including the portion attributable to athletics, on a separate page attached to student invoices;

• 2. assess the feasibility and impact of raising additional revenue through campus recreation

and fitness enterprises to reduce reliance on mandatory student fees. The assessments should address the feasibility and impact of raising additional revenue through charging for specialized programs and services, expanding membership, and/or charging all users of recreation facilities;

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2015 General Assembly Session, continued

• 3. direct staff to perform a comprehensive review of the institution's organizational

structure, including an analysis of spans of control and a review of staff activities and workload, and identify opportunities to streamline the organizational structure. Boards should further direct staff to implement the recommendations of the review to streamline their organizational structures where possible;

• 4. require periodic reports on average and median spans of control and the number of

supervisors with six or fewer direct reports;

• 5. direct staff to revise human resource policies to eliminate unnecessary supervisory

positions by developing standards that establish and promote broader spans of control. The new policies and standards should (i) set an overall target span of control for the institution, (ii) set a minimum number of direct reports per supervisor, with guidelines for exceptions, (iii) define the circumstances that necessitate the use of a supervisory position, (iv) prohibit the establishment of supervisory positions for the purpose of recruiting or retaining employees, and (v) establish a periodic review of departments where spans of control are unusually narrow; and,

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2015 General Assembly Session, continued

• 6. direct institution staff to set and enforce policies to maximize standardization
• f purchases of commonly procured goods, including use of institution-wide

contracts;

• 7. consider directing institution staff to provide an annual report on all

institutional purchases, including small purchases, that are exceptions to the institutional policies for standardizing purchases;

• 8. participate in national faculty teaching load assessments by discipline and

faculty type.

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APA Follow-Up

• We will begin to review institutional

progress with fiscal year 2016 audits (Summer/Fall 2016)

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2016 General Assembly Session

• Commonwealth Data Point

– 2. The database shall contain the following for each of the 10 most recently ended fiscal years

• f the Commonwealth:

– b. The number of full-time state employees and a listing of the positions and salary of each such position, organized by agency;

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2016 General Assembly Session, continued

– 4. The Auditor of Public Accounts shall incorporate in the database the following enhancements:

• a. Graphs, charts, or other visual displays of

aggregated data showing (i) current state spending by expense category, (ii) year-to-year state spending, and (iii) other data deemed appropriate by the Auditor, including display of available line item expenditures; and

• b. Frequently asked questions and their responses

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RESULTS OF FY2015 AUDITS

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Statewide Audit Results

• Study of the Usage of Sub-recipient

Schedule of Expenditures of Federal Awards

• 2015 State of Information Security in the

Commonwealth of Virginia

• Review of the Commonwealth’s Mobile

Devices

• Review of Agency Performance Measures
• Single Audit

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Study of the Usage of Sub-recipient Schedule

• f Expenditures of Federal Awards
• Commonwealth expends approximately

$13.5 billion in federal funds annually.

• Approximately $2.5 billion is passed

through to non-state entities creating a sub- recipient relationship.

• Selected 15 of 37 agencies that reported

disbursements to sub-recipients.

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Results of testing

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Analysis of Statewide Sub-recipients

• Pooled the disbursement to non-state sub-

recipients to determine which received over $500,000. (245)

• Searched Federal Audit Clearinghouse to

determine if they had an audit completed. (225 audits were located)

• 20 did not have a Single Audit.

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Issues Raised

• Of 225 single audits, 46 were reviewed by

all agencies disbursing awards to the sub- recipient.

• Remaining 179 were either not reviewed at

all or by only some of the agencies that disbursed awards to the sub-recipient.

• Agencies do not have access to other

agencies pass-through information so difficult to know if an entity should have a single audit

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Recommendations

• Agencies work with DOA to update the

Federal Grants Management requirements and set expectations for confirming that sub-recipients met their audit requirements.

• DOA develop statewide reports to identify

which sub-recipients received more than $500,000

• Consider adding CFDA numbers to Cardinal

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Information Security Findings by Fiscal Year

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25 18 24 22 34 31 31 44 29 16 39 36 41 51 95

10 20 30 40 50 60 70 80 90 100 2011 2012 2013 2014 2015

Agencies / Findings

Fiscal Year Agencies with findings Agencies without findings Total findings issued

Information Security Findings by Major Control Area

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10 7 4 2 2 1 13 21 18 14 19 6 11 8 563 14 12 7 6

0% 20% 40% 60% 80% 100% 120% 10 20 30 40 50 60 Resulted in Finding Agencies Tested Resulted in Finding # Agencies Tested

Findings by Major Infrastructure Application

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17 15 1 3 1 1

0% 10% 20% 30% 40% 50% 60% 70% 2 4 6 8 10 12 14 16 18 Database Web Application Review Operating System VPN Security Firewall Mobile Device Security Resulted in Finding Agencies Tested Resulted in Finding # Agencies Tested

Review of the Commonwealth’s Mobile Devices

• In January 2013, VITA issued the first

comprehensive set of standards governing the management and use of mobile devices.

• 18 out of 24 agencies and institutions of

higher education surveyed do not have adequate internal policies and procedures

• ver mobile devices

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Wireless Billed Services

VENDOR 2012 2013 Verizon $ 9,578,150 $11,395,510 Sprint/Nextel 1,076,066 543,547 AT&T 668,332 438,108 US Cellular 168,759 105,566 NTelos 31,690 62,481 USA Mobility Wireless, Inc. 289,385 229,228 Grand Total $11,812,382 $12,774,440

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Internal Controls over Mobile Devices

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Entity Count of devices as of 12/2013 Assignment

• f devices

Evaluation

• f need

Safeguarding Monitoring Usage of mobile devices Acceptable Use Agreement Identification

• n devices

CWM 34 N N N N N N N GMU 602 Y Y Y Y Y Y Y NSU 343 N N N N Y N N NVCC 181 Y Y Y Y Y Y Y UVA 144 Y Y Y N Y Y N VITA 357 N N N N N N N VSU 218 Y Y Y N Y Y Y VT 1,701 Y Y Y Y Y Y Y

Legend:

Y Adequate policies and procedures related to this control N Inadequate policies and procedures related to this controllated

USAGE EVALUATION AND COST ANALYSIS

• For Higher Ed institutions using pooled

plans, VSU had 117,600 pool minutes available in a year and only used 21,228. 82% unused

• Commonwealth had $558,436 in overage

charges, and VT was in the top 5 with $21,344 in overages

• None of the Higher Ed institutions had

significant domestic/international roaming charges or significant unused devices

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Full Priced Purchases of Mobile Devices

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Agency Name Total Cost Count of Devices NSU 2,499 4 GMU 1,099 3 VSU 549 1 VT 249 1 Non-Higher Ed 18,932 38 Grand total $23,328 47

Capital Projects Cash Flow Requirements

• 2nd Annual Report on cash flows

requirements for projects in Chapter 806

• Advisory Committee meets quarterly to

evaluate capital projects

• Expenditures have stayed within the $250

million annual limit

• Found delays in obtaining planning funds

from the Central Capital Planning Fund

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Central Capital Planning Fund Funding Analysis

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Review of Agency Performance Measures

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FY 2012 FY 2014

Key Measures

224 295

Productivity Measures

78 96

Other Agency Measures

1,135 547

Total Performance Measures

1,437 938

Virginia’s Performance Measurement Structure

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Issue Highlighted in Report

• Measures developed by administration for

inclusion in the Executive Agreements did not conform to DPB’s guidelines for developing performance measures.

– Half did not conform to the guidelines – Some could not be readily measured

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Governance over Enterprise Applications

• Strengthen the governance over enterprise

applications by establishing a Deputy Chief of Staff position with responsibility over governance along with a group of legislative representatives and executive branch data stewards to advise the Deputy in:

– establishing a Commonwealth strategic direction over enterprise applications, – setting long-term goals, – prioritizing system replacement and upgrade, and providing transparency of their choices via a six-year plan.

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Review of eVA and Cardinal Interface Efforts

• The current efforts to integrate the Cardinal

finance module and eVA procurement system are expected to cost $8 million and provide an interface for only roughly 11,000 transactions annually, resulting in a cost that outweighs the efficiency and transparency benefits it would add.

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Projects Currently Under Way

• Travel Study Part 2 – under way
• Comparative Report for Higher Education –

under way

• Financial Reporting Systems in the

Commonwealth - under way; issue date in the fall

• Voyager Gas Card Study - put on hold and

will try to include in the next work plan

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2015 Single Audit: 110 Total Findings

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2 4 6 8 10 12 14 16 18 20

Fixed Assets and Leases Inventory Other Procurement Revenues Systems Security Application Controls IT Audit Plans IT Change Management Payroll IT Information Security Officer Independence IT Physical Access Controls Statement of Economic Interests IT End-of-Life Technology IT Security General Controls IT Third-Party Providers IT Information Security Program Financial Reporting Retirement System Member Data IT Risk Management and Contingency Planning Federal Award Findings and Questioned Costs - Not… IT Access Controls IT System Security Configuration Controls

2015 Single Audit: 69 IT Findings

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2 4 6 8 10 12 14 16 18 20 IT Audit Plans IT Change Management IT Information Security Officer Independence IT Physical Access Controls IT End-of-Life Technology IT Security General Controls IT Third-Party Providers IT Information Security Program IT Risk Management and Contingency Planning IT Access Controls IT System Security Configuration Controls

Single Audit Results for Higher Ed - Summary

# of Institutions Subject of Finding # Findings 2 IT System Security Configuration Controls 4 1 Access Controls 1 5 Federal Award Findings and Questioned Costs (no f/s impact) 9 2 Retirement System Member Data 2 1 Inventory 1 1 Procurement 1

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Completed 2015 Audits for Higher Education

• College of William & Mary and Richard

Bland College

• Norfolk State University
• University of Virginia and Medical Center
• Virginia Commonwealth University
• Virginia Polytechnic Institute and State

University

• Virginia State University

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2015 Audit Results for Higher Ed - Details

IT Issues # Findings System Security Configuration Controls 5 Access Controls 4 Information Security Program Controls 3 IT Server Maintenance and Management Controls 1 IT Asset Surplus and Sanitization Controls 1

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2015 Audit Results for Higher Ed - Details

Federal Issues # Findings Return of Aid 3 Enrollment Reporting 2 Reconciliation of Federal Accounts 2 Disbursing Aid 2 Foundation Reimbursement for Employee Time 1

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2015 Audit Results for Higher Ed - Details

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Other Issues # Findings Retirement System Member Data 4 Procurement and Accounts Payable 4 Personnel and Payroll 3 Asset Inventory 2 Financial Reporting 1 Financial Analysis 1

UPCOMING CHANGES TO AUDITS OF SFA/R&D

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Change to Audit Approach for Student Financial Aid

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• Under Uniform Guidance (CFR 200), we had

to rethink how we determine major programs

• Financial aid will become a major program
• nce every 3 years assuming it remains a

low risk type A program

Coverage

Agency Number Agency Name Approximate Percent of Coverage

207 UVA 8.4% 208 VT 8.8% 212 VSU 3.7% 213 NSU 3.3% 216 JMU 5.9% 217 RU 3.8% 221 ODU 8.6% 236 VCU 14.5% 247 GMU 10.3% 280 NVCC 6.5% 295 TCC 5.2% Total 79.2%

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Remaining Institutions

• Audits will coincide with five-year and ten-

year reaffirmation of accreditation in accordance with timelines published by the Southern Association of Colleges and Schools Commission on Colleges (SACSCOC)

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Track A

• Institutions that do not issue graduate

degrees.

• The ten year reaffirmation for these schools
• ccurs in June of the reaffirmation year.
• The five year reaffirmation for these schools
• ccurs in December.
• Audit work will be timed to include financial

aid coverage in the audit used for the review

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Track B

• Institutions that issue graduate degrees and

include all four-year institutions except VMI and UVA-Wise

• Ten year reaffirmation for Track B

institutions occurs in December of the calendar year, five year in June.

• Audit work will be timed to include financial

aid coverage in the audit used for the review

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Billings

• For the 11 institutions included in the Single

Audit, the billings will be done in the Spring after issuance of the single audit report

– First year for all in cycle is FY2018 so billings in spring 2019

• For institutions with financial aid work to

support reaccreditation, the bill will not include the central single audit allocation.

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Research and Development

• R&D will be a major program every 3 years

starting in 2017

• First billing with new cycle will be Spring

2018

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UPCOMING CHANGES FOR FIDUCIARY ACTIVITIES

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Fiduciary Activities

• The Exposure Draft proposes that a

government would be considered to control assets that may be associated with a fiduciary activity if the government holds the assets.

• To be the assets of a fiduciary activity, the

GASB is proposing that they cannot come solely from a government’s own-source revenue.

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Fiduciary Activities, continued

• The government would be engaged in a

fiduciary activity if those assets meet at least one of these four criteria:

– assets are administered through a trust – assets are for people who qualify as beneficiaries for reasons other than being the government’s residents or service recipients – assets are for entities that are neither a part of the government’s financial reporting entity nor recipients of its services

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Fiduciary Activities, continued

– assets come from a pass-through grant for a program in which the government does not have administrative or direct financial involvement

• Three fund types would be used only to

report assets held in trusts:

– Pension (and other employee benefit) trust funds – Investment trust funds – Private-purpose trust funds

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Fiduciary Activities, continued

• Proposing that funds not held in trust would

be reported as a new type of fiduciary fund—custodial funds.

• Custodial funds also would include what

governments are now reporting as agency funds.

• Agency funds report resources held

temporarily before being passed along to their intended recipients

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Custodial Funds

• If assets meet the proposed definitions and

criteria, a government would be required to report them in fiduciary fund financial statements.

• However, based on cost-benefit

considerations, the GASB has proposed an exception related to custodial funds for business-type activities (BTAs) such as public colleges and universities and utilities.

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Custodial Funds Exception

• If a BTA has assets and corresponding

liabilities that it would be required to report in a custodial fund, but those assets are expected to be held for 3 months or less, the BTA may report the assets and liabilities in its own SNP instead of in a fiduciary fund.

• Report significant additions to and

deductions from those assets as operating cash inflows and outflows in the statement

• f cash flows.

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Questions?

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