1. Systemwide Audit Scope and PBCs Liezl Sangalang KPMG LLP Year-End GAAP Training April 18, 2014

2. The Reporting Entity April 2014Year-End GAAP Training2 23 Campuses + Chancellor’s Office 90+ Auxiliary Organizations CSU System Financial Statements

3. CSU Systemwide Audit Objective of an audit To express an opinion whether the University’s financial statements are presented fairly, in conformity with generally accepted accounting principles To provide reasonable, not absolute assurance April 2014Year-End GAAP Training3

4. CSU Systemwide Audit Management’s responsibilities Adopting sound accounting policies Fairly presenting the financial statements in conformity with GAAP Establishing and maintaining effective internal control over financial reporting Establishing and maintaining internal controls to prevent, deter and detect fraud April 2014Year-End GAAP Training4

5. CSU Systemwide Audit Identifying and conforming with laws and regulations Setting the proper tone and creating and maintaining a culture of honesty and high ethical standards Making all financial records and related information available to the auditor Providing the auditor with management representation letter April 2014Year-End GAAP Training5 Chapter 9

6. Group Audit Approach April 2014Year-End GAAP Training6 23 Campuses + Chancellor’s Office 90+ Auxiliary Organizations Systemwide procedures Campus specific procedures Non-KPMG Auditors

7. Group Audit Approach Risk Assessment identify and assess risks of material misstatement Materiality “determination based on professional judgment” “consideration of both quantitative and qualitative factors” April 2014Year-End GAAP Training7

8. Group Audit Approach Scoping Group Materiality (Systemwide Procedures, i.e. Investments) Component Materiality (Campus Procedures) Other Considerations Aggregation Risk – “is the probability that the aggregate uncorrected and undetected misstatements in the financial statements exceeds materiality for the financial statements as a whole.” April 2014Year-End GAAP Training8

9. Group Audit Approach April 2014Year-End GAAP Training9 KPMG Systemwide Team KPMG Campus Team - Systemwide procedures - Campus specific procedures - Chancellor’s Office - Channel Islands - Dominguez Hills - Fullerton - Long Beach - Northridge - San Diego - San Francisco - San Jose - San Luis Obispo - San Marcos

10. Audit PBC List Campus PBC list PBC format and uploading the PBC list New PBC - PBC 152 (SRB Transfer Schedule) PBC 81 clarification – include the “SRB fund” PBC 95 clarification April 2014Year-End GAAP Training10 Chapter 9

11. Audit PBC List Other changes PBC 3: Statement of cash flow worksheet PBC 11: GAAP Financial Reporting Checklist PBC 120: GAAP Preparation Checklist April 2014Year-End GAAP Training11

12. www.calstate.edu April 2014Year-End GAAP Training12