FOCUS Fall 2005 November 17, 2005 Bill Cole Deputy Auditor of Public Accounts Commonwealth of Virginia

Agenda GASB 40 – Work to be done NCAA Agreed-Upon Procedures – How are “we” doing? Timely Financial Statements – Is Improvement Possible? Update on Deferred Maintenance Project Update on Auxiliary Enterprise Project Senate Bill 934 – What is its status?

GASB 40 - Deposit and Investment Risk Disclosures Effective 2005 Financial Statements Amends GASB 3, which focused primarily on custodial credit risk Requires more comprehensive risk disclosures including custodial credit risk, concentration of credit risk, interest rate risk, and foreign currency risk

GASB 40 - Deposit and Investment Risk Disclosures Categories 1 and 2 are eliminated Requires disclosure of authorized investments and investment policies

NCAA Agreed-Upon Procedures How are WE (collective “we”) doing?

NCAA Agreed-Upon Procedures Replaces financial audit guidelines with agreed- upon procedures Report purposes: –Ensure CEO is aware of all financial activity (both internal and external) –Assist institution in exercising control over financial activity made by or all behalf of IA programs Institution must submit financial data annually to the NCAA covering all financial data, including those by affiliated or outside organizations Due date – January 15

NCAA Agreed-Upon Procedures Revised financial reporting –Improves revenue and expense definitions –Includes data elements missing in prior reporting Development Costs Academic Advising Costs Other minor costs?? –Requires CEO approval –Reporting data through online system

NCAA Agreed-Upon Procedures Supporting schedules for material revenues –Ticket sales –Student fees –Game guarantees, away game settlements –Contributions and gifts (including in-kind & on-behalf) –Other third party support ( previously unreported ) –Institutional support (i.e. transfers) –NCAA/Conference distributions –Broadcast and Internet rights –Advertising, royalties, sponsorships –Camp revenues –Endowment income –Total of 15 revenue categories

NCAA Agreed-Upon Procedures Expenses –Student athletic aid recipients –Game guarantees –Salaries and benefits (supported by W2s) Paid by institution Paid by third parties –Severance payments –Recruiting and travel –Indirect support –Total of 19 expense categories

NCAA Agreed-Upon Procedures Federal reporting requirement under the EADA has not changed Equity in Athletics Disclosure Act (EADA) – –Data must be available by October 15

NCAA Agreed-Upon Procedures Debt Repayment Schedules – Include in Notes to the NCAA Schedule Timing of audit procedures –EARLIER, RATHER THAN LATER –Review of schedule – upon its completion EADA deadline (October 15) NCAA deadline (January 15) –Prepared by Client (PBC) listing – handout New Auditor’s Report on Agreed-Upon Procedures - handout

NCAA Agreed-Upon Procedures Note Disclosures (mandated by NCAA) –Contributions that constitute 10% or more of all contributions received –Schedule of athletic-related fixed assets Substantiated by the general ledger Including description of policies and procedures for acquiring, approving, depreciating, and disposing of these assets –Debt Repayment Schedules

NCAA Agreed-Upon Procedures Note Disclosures (General) –Basis of Accounting –Athletic Overhead Fees / Administration Fee / Administrative Cost Recoveries –Endowments / Quasi-Endowments –Subsequent Events (if any) –Other

NCAA Agreed-Upon Procedures So what is the answer to the question, “How are we (collective ‘we’) doing?” –Preparation of NCAA Schedule of Revenues and Expenses –Supporting schedules –Support from outside parties (i.e. foundations) –Meeting the deadline

Timely Financial Statements Is Improvement Possible?

Timely Financial Statements BOV questions about audit timing Market pressures for timely reporting Institutions material and non-material to CAFR Audit work at varying times during the year Better use of technological capabilities Use of web-based systems Cooperation of institutions

Timely Financial Statements Improvement Possible? – Qualified “YES” –Systems Implementation Issues –Foundation Reporting – must continue to emphasize the importance (Also, NCAA reporting issues) –Use of estimates, where possible –Commitment of resources to the project –Documentation of financial statement preparation process

Deferred Maintenance Project 2004 General Assembly directed APA to conduct a review to determine amount of deferred maintenance and ongoing major maintenance needs To assist in determining amount of deferred maintenance, APA acquired a Facility Inventory and Condition Assessment System (FICAS) for agency and higher education use

Deferred Maintenance Project All institutions of higher education were required to participate under a very tight timeframe –Inventory buildings –Perform condition assessment Good cooperation from institutions We are now testing the information in the system –Are inventories complete? –Are assessments accurate?

Deferred Maintenance Project Capital Assets Management Team visited selected institutions Questions concerning discrepancies were ed this week to contacts (with system access) Corrective action requested by December 31 Final report will be issued December 15 Contact DeAnn Compton or Sue Owens (Capital Asset Management Team) for additional information

Auxiliary Enterprises Project Draft Report in Review Stage –Types of auxiliaries –Activities reported –Current guidance –Funding, balances, reserves

Tuition as a Percentage of Total Mandatory Cost of Attendance For the Academic Year Tuition and E&G Fees Tuition as a percentage of Total Cost Mandatory Non- E&G Fees Fees as a Percentage of Total Cost Total Mandatory Cost of Attendance VT$5,29783%$1,08117%$6,378 UVA5,71480%1,46620%7,180 VCU4,01275%1,37325%5,385 GMU4,35674%1,52426%5,880 UMW3,96070%1,67430%5,634 RU3,23563%1,89537%5,130 ODU3,54263%2,07237%5,614 VMI**4,38263%2,60637%6,988 CWM4,81562%2,96338%7,778 CNU3,04160%2,04040%5,081 NSU2,58053%2,30047%4,880 LU3,66652%3,35448%7,020 JMU2,99851%2,88849%5,886 VSU2,31748%2,51752%4,834

Auxiliary Enterprises Project DRAFT Recommendations –Develop a more detailed definition of auxiliary enterprises –Disaggregation of comprehensive mandatory non-E&G fees Athletics Student Health –Best practices of A/E management –Develop specific, consistent procedures for preparing Schedule of A/E operations and reserves

Senate Bill 934 Internet Database APA shall compile and maintain on its Internet website a searchable database providing certain state expenditure, revenue, and demographic information. Updated by October 15 (11/1 for ’05) All departments, officers, boards, commissions, and institution shall furnish information to the APA and cooperate to fullest extent

Senate Bill 934 Internet Database Database shall contain the following for the 10 most recent fiscal years: –Major categories of spending by secretariat and major agencies –# of full-time state employees –Revenues –Comparison with other states –Federal revenues and spending –Population –Student enrollment (K through 12)

Senate Bill 934 Internet Database Database shall contain the following for the 10 most recent fiscal years: –Enrollment in public higher ed institutions –Enrollment in private higher ed institutions –Annual prison populations –VA AGI and taxable income by age groups –# of citizens receiving food stamps –# of driver licenses issued –# of registered motor vehicles –# of full-time private sector employees

Senate Bill 934 Internet Database Database shall contain the following for the 10 most recent fiscal years: –# of households –# of prepaid tuition contracts and estimated liability –Other data the Auditor deems appropriate Distribute file to newspapers

Senate Bill 934 Internet Database Status – Database was available November 1 through APA webpage –Not fully completed, updated as information is available –Search engine not included but inevitable Disclaimer for information not provided Future updates - Quarterly DEMO !!!

QUESTIONS???