Auditor Communications Audit Committee Presented By Sarah - PowerPoint PPT Presentation

CLICK TO EDIT MASTER TEXT STYLES Auditor Communications Audit Committee Presented By Sarah Belliveau and Nathan Dunlap October 17, 2019

CLICK TO EDIT MASTER TEXT STYLES DISCUSSION OUTLINE 1 2 FINANCIAL STATEMENT FINANCIAL STATEMENT AUDIT HIGHLIGHTS OPPORTUNITY FOR 3 4 REQUIRED AUDITOR QUESTIONS/EXECUTIVE COMMUNICATIONS SESSION 2

CLICK TO EDIT MASTER TEXT STYLES 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 3

FINANCIAL STATEMENT HIGHLIGHTS CLICK TO EDIT MASTER TEXT STYLES • Adopted the provisions of GASB 87, Leases Requires recognition of certain lease assets and liabilities for leases that were previously classified o 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 o 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 o enhancing the relevance and consistency of information about governments' leasing activities. 4

CLICK TO EDIT MASTER TEXT STYLES FINANCIAL STATEMENT HIGHLIGHTS Statement of Financial Position 20,000,000 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - Cash and equivalents Medicaid eeceivable Receivables from the General Capital assets Prepaid expenses Fund 2019 2018 2017 5

CLICK TO EDIT MASTER TEXT STYLES FINANCIAL STATEMENT HIGHLIGHTS Statement of Financial Position 18,000,000 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - Accounts payable and Payroll liabilities Financing leases OPEB liability Net pension liability accrued liabilities 2019 2018 2017 6

CLICK TO EDIT MASTER TEXT STYLES FINANCIAL STATEMENT HIGHLIGHTS Total Revenues by Source $35,000,000 $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- Carrier assessment and General Fund revenue Medicaid/CHIP revenue Federal grant revenue Premium Tax 2019 2018 2017 7

CLICK TO EDIT MASTER TEXT STYLES FINANCIAL STATEMENT HIGHLIGHTS Total Expenses by Function $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $- System maintenance Professional Salaries and benefits Depreciation and Call center Equipment and Other and enhancements services amortization occupancy 2019 2018 2017 8

FINANCIAL STATEMENT HIGHLIGHTS CLICK TO EDIT MASTER TEXT STYLES 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 9

FINANCIAL STATEMENT HIGHLIGHTS CLICK TO EDIT MASTER TEXT STYLES 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 10

FINANCIAL STATEMENT HIGHLIGHTS CLICK TO EDIT MASTER TEXT STYLES FINANCIAL STATEMENT FOOTNOTES • Note 6 – Commitments • Note 7 – Pension • Note 8 – Other Post Employment Benefits 11

CLICK TO EDIT MASTER TEXT STYLES YELLOW BOOK REPORT DEFINITION OF AUDIT DEFINITION OF MATERIAL RESULTS SIGNIFICANT WEAKNESS DEFICIENCY • We did not identify any • A deficiency in internal • A deficiency in internal deficiencies in internal control such that a material control that is less severe control that we consider to misstatement of the than a material weakness, be material weaknesses. financial statements may yet important enough to not be prevented, or merit attention by those • However, material detected and corrected, by charged with governance. weaknesses may exist that the University’s internal have not been identified. control. • No noncompliance with laws, regulations, contracts and grant agreements that would be direct and material 12

REQUIRED AUDITOR COMMUNICATIONS CLICK TO EDIT MASTER TEXT STYLES OUR RESPONSIBILITY PLANNING AND MANAGEMENT’S PERFORMING THE RESPONSIBILITY AUDIT • To express an opinion on • The preparation and fair • We consider internal the financial statements presentation of the financial control, but do not express based on our audit statements is an opinion on it. performed in accordance management’s • We perform tests in key with under U.S. Generally responsibility. audit areas; those tests Accepted Auditing may change from year to Standards and year. Government Auditing Standards . 13

REQUIRED AUDITOR COMMUNICATIONS CLICK TO EDIT MASTER TEXT STYLES QUALITATIVE ASPECTS CORRECTED AND MANAGEMENT’S OF ACCOUNTING UNCORRECTED JUDGMENTS AND POLICIES MISSTATEMENTS ESTIMATES • Adopted GASB 87, Leases • Depreciation Expense • No significant audit • OPEB liability adjustments • No other new accounting • Net pension liability policies adopted and • No passed adjustments application of existing • One reclassifying entry for policies was not changed the current portion of • No transactions lacked leases payable- financial authoritative guidance statement purposes only, no impact on bottom line • All significant transactions were recorded in the correct period 14

REQUIRED AUDITOR COMMUNICATIONS CLICK TO EDIT MASTER TEXT STYLES 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 ordinary course of business and not a condition of our retention 15

CLICK TO EDIT MASTER TEXT STYLES Contact Us Nathan Dunlap, CPA, CFE Sarah Belliveau, CPA Senior Principal ndunlap@berrydunn.com sbelliveau@berrydunn.com 207.541.2334 207.541.2237 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.