f Presentation to those Charged with Governance March 10, 2017
INTRODUCTIONS K NOWLEDGE Q UALITY C LIENT S ERVICE
Engagement Team Leadership C LIENT S ERVICE SB & Company, LLC Cynthia Borders-Byrd, Audit Principal Q UALITY Chris Lehman, Audit Partner K NOWLEDGE 3
EXECUTIVE SUMMARY K NOWLEDGE Q UALITY C LIENT S ERVICE
Scope of Services C LIENT S ERVICE Audit of the June 30, 2016, financial statements Uniform Guidance Single Audit; Florida Single Audit; Chapter 10.650, Rules of the Auditor General; and Special Guidance Q UALITY Provided by the Florida Office of Early Learning Preparation of the 2015 Federal Form 990 Available for year-round consultation K NOWLEDGE 5
C LIENT S ERVICE Summary of the Results • Planning to issue an unmodified opinion on the financial statements • No material weaknesses noted • We did not discover any instances of fraud • Received full cooperation from management • Results: Q UALITY 2016 2015 2014 Change in Net Assets $ (12,354) $ (28,421) $ 43,124 Net Assets $ 261,602 $ 273,956 $ 302,377 • Audit journal entries • One proposed journal entry for compensated absences liability (restatement to beginning net assets) • No single audit findings K NOWLEDGE 6
K NOWLEDGE Q UALITY C LIENT S ERVICE
FORCAM Audit Approach C LIENT S ERVICE “Focus on Risk, Controls and Misstatement” Q UALITY K NOWLEDGE 8
Assessment of Control Environment C LIENT S ERVICE Area Points to Consider Our Assessment Key executive integrity, ethics, and behavior Control consciousness and operating style Commitment to competence Control Exercise oversee responsibility Environment Organizational structure, responsibility, and authority Enforce accountability HR policies and procedures Define objectives and risk tolerances Identify, analyze, and respond to risk Assess fraud risk Q UALITY Identify, analyze, and respond to change Risk Assessment Mechanisms to anticipate, identify, and react to significant events Processes and procedures to identify changes in GAAP, business practices, and internal control Design control activities Design activities for the information system Implement control activities Existence of necessary policies and procedures Clear financial objectives with active monitoring Control Activities Logical segregation of duties Periodic comparisons of book-to-actual and physical count-to-books Adequate safeguards of documents, records, and assets K NOWLEDGE Assess controls in place Not effective Suggested improvements Effective 9
Assessment of Control Environment C LIENT S ERVICE (continued) Area Points to Consider Our Assessment Use quality information Communicate internally Communicate externally Adequate performance reports produced from information systems Information systems are connected with business strategy Commitment of HR and finance to develop, test, and monitor IT Information and systems and programs Communication Business continuity and disaster plan for IT Q UALITY Established communication channels for employees to fulfill responsibilities Adequate communication across organization Perform monitoring activities Remediate deficiencies Monitoring Periodic evaluations of internal controls Implementation of improvement recommendations Not effective K NOWLEDGE Suggested improvements Effective 10
Significant Accounts and Processes C LIENT S ERVICE Q UALITY K NOWLEDGE 11
Evaluation of Key Processes C LIENT S ERVICE Process Function A B C D Design Operation Cash Management Investment Accounting Investment Monitoring Treasury Investment Valuation Investment Policy Reconciliation Methodology Information Estimation Q UALITY Calculation Accounting Principles and Disclosure Closing the Books Report Preparation Financial General Ledger and Journal Entry Reporting Processing Verification and Review of Results Not effective A Understand the Process C What Can Go Wrong Suggested improvements B Walk-Through D Test of Control K NOWLEDGE Effective 12
Evaluation of Key Processes C LIENT S ERVICE (continued) Process Function A B C D Design Operation Purchasing Receiving Accounts Payable and Cash Expenditures Disbursement Purchase Card Transactions Hiring Attendance Reporting Q UALITY Payroll Accounting and Processing Payroll Payroll Disbursements Separation Billing Cash Receipts Revenue Revenue Recognition Cutoff Not effective A Understand the Process C What Can Go Wrong Suggested improvements B Walk-Through D Test of Control K NOWLEDGE Effective 13
Evaluation of Key Processes C LIENT S ERVICE (continued) Process Function A B C D Design Operation Physical Custody Fixed Assets Asset Accounting Assess Internal and External Risk Regulatory Compliance Compliance Monitor Compliance Q UALITY Grant Compliance Program Integrity and Change Management Information Security and Transaction Information Authorization Technology Segregation of Duties and Management Oversight Computer Operations K NOWLEDGE Not effective A Understand the Process C What Can Go Wrong Suggested improvements B Walk-Through D Test of Controls Effective 14
Key Accounts Assertions C LIENT S ERVICE and Audit Results Key Accounts Assertions Results Cash Existence Grants receivable Existence, Valuation Accounts payable and accrued expenses Completeness Due to providers Completeness Q UALITY Revenue and support Occurrence Expenses Completeness Material adjustments Immaterial adjustments No adjustments K NOWLEDGE 15
K NOWLEDGE Q UALITY C LIENT S ERVICE
Financial Statement Highlights C LIENT S ERVICE STATEMENT OF NET ASSETS JUNE 30, 2016, 2015 and 2014 2016 2015 2014 ASSETS Cash $ 385,408 $ 416,358 $ 225,273 Grants receivable 7,373,496 6,693,130 6,769,242 Advance to providers 13,626 14,659 13,837 Prepaid expenses 36,990 27,744 28,008 Furniture and equipment, net 10,758 22,090 33,259 Total Assets $ 7,820,278 $ 7,173,981 $ 7,069,619 Q UALITY LIABILITIES AND NET ASSETS $ 182,358 Accounts payable and accrued expenses $ 353,633 $ 259,894 38,061 Advances from OEL 16,974 13,370 Due to providers: Family Central 161,757 6,057,878 5,906,740 School Board of Broward 174,198 189,497 325,946 Nova Southeastern University 170,863 170,702 170,776 Children's Forum 10,634 111,341 90,516 Broward Regional Health Planning Commission 6,693,914 - - 211 Broward 126,891 - - K NOWLEDGE Total Liabilities 7,558,676 6,900,025 6,767,242 Net Assets Unrestricted 261,602 273,956 302,377 Total Liabilities and Net Assets $ 7,820,278 $ 7,173,981 $ 7,069,619 17
Financial Statement Highlights (continued) C LIENT S ERVICE STATEMENT OF ACTIVITIES AND CHANGES IN NET ASSETS FOR THE YEARS ENDED JUNE 30, 2016, 2015 and 2014 2016 2015 2014 Revenue and Support Federal grants $ 46,586,840 $ 44,699,749 $ 43,728,739 State grants 39,065,527 38,232,900 37,381,831 Children's Services Council of Broward County 7,028,509 4,395,576 6,012,827 Other income 85,848 57,625 26,515 Total Revenue and Support 92,766,724 87,385,850 87,149,912 Q UALITY Expenses Program Services School Readiness (SR) 44,591,310 39,410,957 41,881,079 Voluntary Pre-kindergarten (VPK) 37,471,489 36,715,668 34,443,335 Entrance/Refugees 74,117 - - Program support and administration 8,780,679 9,645,901 9,105,040 Total Program Services 90,917,595 85,772,526 85,429,454 1,861,483 General and administrative 1,615,055 1,627,715 - Fundraising 26,690 49,619 Total Expenses 92,779,078 87,414,271 87,106,788 K NOWLEDGE Change in unrestricted net assets (12,354) (28,421) 43,124 Net assets, beginning of year 273,956 302,377 259,253 Net Assets, End of Year $ 261,602 $ 273,956 $ 302,377 18
Single Audit Results C LIENT S ERVICE CFDA Federal Major Federal Program Number Expenditures Temporary Assistance for Needy Families (TANF) 93.558 $ 7,994,928 Temporary Assistance for Needy Families 5,648,389 Maintenance of Effort Funds 93.558 Total TANF $ 13,643,317 Total Expenditures of Federal Awards $ 46,586,840 Q UALITY Percentage Coverage 29% CFDA Federal Major Florida State Program Number Expenditures Florida Office of Early Learning Voluntary Pre-Kindergarten Services 48.108 $ 38,969,526 Voluntary Pre-Kindergarten Services 48.108 96,001 Total Florida Office of Early Learning $ 39,065,527 Total Expenditures of State Financial Assistance $ 39,065,527 Percentage Coverage 100% K NOWLEDGE 19
K NOWLEDGE Q UALITY C LIENT S ERVICE
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