1. Systemwide Audit Scope Liezl Sangalang, Senior Manager KPMG LLP April 24, 2015

2. Learning Objectives: Differentiate between the role of the auditor and the responsibilities of management. Understand the scope of the audit of California State University System. April 2015Year-End GAAP Training2

3. Systemwide Audit Scope Objectives 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 2015Year-End GAAP Training3

4. Systemwide Audit Scope (cont.) 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 2015Year-End GAAP Training4

5. Systemwide Audit Scope (cont.) 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 2015Year-End GAAP Training5 Chapter 9

6. Systemwide Audit Scope (cont.) April 2015Year-End GAAP Training6 23 Campuses + Chancellor’s Office 90+ Auxiliary Organizations CSU System Financial Statements

7. Systemwide Audit Scope (cont.) Risk Assessment identify and assess risks of material misstatement Materiality “determination based on professional judgment” “consideration of both quantitative and qualitative factors” April 2015Year-End GAAP Training7

8. Systemwide Audit Scope (cont.) 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 2015Year-End GAAP Training8

9. Systemwide Audit Scope (cont.) April 2015Year-End GAAP Training9 KPMG Systemwide Team KPMG Campus Team - Fullerton - Long Beach - Northridge - Sacramento - San Diego - San Francisco - San Jose - San Luis Obispo - Systemwide procedures - Campus specific procedures - Chancellor’s Office

10. www.calstate.edu April 2015Year-End GAAP Training10