Auditor Communications Audit Committee Presented By Sarah - - PowerPoint PPT Presentation

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Auditor Communications

Audit Committee

Presented By Sarah Belliveau and Nathan Dunlap October 17, 2019

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DISCUSSION OUTLINE

FINANCIAL STATEMENT HIGHLIGHTS FINANCIAL STATEMENT AUDIT

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OPPORTUNITY FOR QUESTIONS/EXECUTIVE SESSION REQUIRED AUDITOR COMMUNICATIONS

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FINANCIAL STATEMENT AUDIT

• Performed in accordance with U.S. generally accepted auditing standards and Government

Auditing Standards

• Designed to obtain reasonable, not absolute assurance
• Performed on a test basis
• Requires understanding of internal control
• Discussion of significant audit areas and surprise procedure
• UNMODIFIED OPINION on the financial statements

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FINANCIAL STATEMENT HIGHLIGHTS

• Adopted the provisions of GASB 87, Leases
• Requires recognition of certain lease assets and liabilities for leases that were previously classified

as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract.

• Establishes a single model for lease accounting based on the foundational principle that leases are

financings of the right to use an underlying asset.

• Lessee is required to recognize a lease liability and an intangible right-to-use lease asset, thereby

enhancing the relevance and consistency of information about governments' leasing activities.

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CLICK TO EDIT MASTER TEXT STYLES FINANCIAL STATEMENT HIGHLIGHTS

• 2,000,000

4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 20,000,000 Cash and equivalents Medicaid eeceivable Receivables from the General Fund Capital assets Prepaid expenses

Statement of Financial Position

2019 2018 2017 5

CLICK TO EDIT MASTER TEXT STYLES FINANCIAL STATEMENT HIGHLIGHTS

• 2,000,000

4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 Accounts payable and accrued liabilities Payroll liabilities Financing leases OPEB liability Net pension liability

Statement of Financial Position

2019 2018 2017 6

CLICK TO EDIT MASTER TEXT STYLES FINANCIAL STATEMENT HIGHLIGHTS $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 Carrier assessment and Premium Tax General Fund revenue Medicaid/CHIP revenue Federal grant revenue

Total Revenues by Source

2019 2018 2017 7

CLICK TO EDIT MASTER TEXT STYLES FINANCIAL STATEMENT HIGHLIGHTS $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 System maintenance and enhancements Professional services Salaries and benefits Depreciation and amortization Call center Equipment and

• ccupancy

Other

Total Expenses by Function

2019 2018 2017 8

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FINANCIAL STATEMENT HIGHLIGHTS

KEY CHANGES IN THE FINANCIAL STATEMENTS

• Net position increased by approximately $3.9 million in 2019
• Capital assets increased $5.3 million in 2019
• Prepaid expenses increased $2 million in 2019
• Accounts payable and accrued expenses increased $1.8 million in 2019
• Recognized $2.3 million of lease liability due to GASB 87 in 2019

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FINANCIAL STATEMENT HIGHLIGHTS

Cash Flow Statement Highlights

• Total cash and cash equivalents increased by approximately $578,000 in 2019
• Cash flows from operations – ($26.8M) and ($30.1M) in 2019 and 2018, respectively. Negative due

to the fact that Medicaid revenue and general fund reimbursements are considered noncapital financing activities for GASB reporting purposes.

• Medicaid revenue and general fund reimbursements increased from $27M to $31M in 2019
• Cash used for capital and related financing was ($3.5M) and ($9.0M) in 2019 and 2018,
• respectively. Excludes $1.3M of capital asset acquisitions included in accounts payable in 2019 and

$2.8M of additions related to recognition of GASB 87

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FINANCIAL STATEMENT HIGHLIGHTS

FINANCIAL STATEMENT FOOTNOTES

• Note 6 – Commitments
• Note 7 – Pension
• Note 8 – Other Post Employment Benefits

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YELLOW BOOK REPORT

• A deficiency in internal

control such that a material misstatement of the financial statements may not be prevented, or detected and corrected, by the University’s internal control. DEFINITION OF MATERIAL WEAKNESS DEFINITION OF SIGNIFICANT DEFICIENCY AUDIT RESULTS

• A deficiency in internal

control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

• We did not identify any

deficiencies in internal control that we consider to be material weaknesses.

• However, material

weaknesses may exist that have not been identified.

• No noncompliance with

laws, regulations, contracts and grant agreements that would be direct and material

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REQUIRED AUDITOR COMMUNICATIONS

• To express an opinion on

the financial statements based on our audit performed in accordance with under U.S. Generally Accepted Auditing Standards and Government Auditing Standards. OUR RESPONSIBILITY MANAGEMENT’S RESPONSIBILITY PLANNING AND PERFORMING THE AUDIT

• The preparation and fair

presentation of the financial statements is management’s responsibility.

• We consider internal

control, but do not express an opinion on it.

• We perform tests in key

audit areas; those tests may change from year to year.

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REQUIRED AUDITOR COMMUNICATIONS

• Adopted GASB 87, Leases
• No other new accounting

policies adopted and application of existing policies was not changed

• No transactions lacked

authoritative guidance

• All significant transactions

were recorded in the correct period QUALITATIVE ASPECTS OF ACCOUNTING POLICIES MANAGEMENT’S JUDGMENTS AND ESTIMATES CORRECTED AND UNCORRECTED MISSTATEMENTS

• Depreciation Expense
• OPEB liability
• Net pension liability
• No significant audit

adjustments

• No passed adjustments
• One reclassifying entry for

the current portion of leases payable- financial statement purposes only, no impact on bottom line

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REQUIRED AUDITOR COMMUNICATIONS

DISAGREEMENTS OR DIFFICULTIES

• No disagreements with management
• No difficulties in performing the audit; management was well prepared and proactive during the audit

MANAGEMENT’S REPRESENTATIONS

• As part of the audit, we will obtain a signed letter from management attesting to certain representations made during

the audit

CONSULTATIONS AND OTHER MATTERS

• We are not aware of management having consultations with other accountants. If it were to be the case, standards

require those auditors check with us to ensure they have all the relevant facts

• We communicate with management throughout the year on a variety of matters. Those discussions were in the
• rdinary course of business and not a condition of our retention

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Contact Us

Sarah Belliveau, CPA

Principal sbelliveau@berrydunn.com 207.541.2237

Nathan Dunlap, CPA, CFE

Senior ndunlap@berrydunn.com 207.541.2334

This communication is intended solely for the information and use of the Board of Trustees, Audit Committee, and management and is not intended to be, and should not be, used by anyone other than these specified parties.