1. WADE Conference June 14, 2016 Kristina Baylor, Program Manager
Philip Mendoza, Assistant Audit Manager

2. Agenda
Overview of conservation districts from annual reporting perspective
How did we do?
BARS Manual – Annual Reports (and the Schedule 22)
Changes from prior year submissions
Changes associated with Uniform Guidance
Internal Controls
Effective internal controls
Common issues identified in audits
Financial Intelligence Tool (FIT)
Agency Updates

3. Overview of Conservation Districts
Basis of Accounting – Cash Basis
Subject to RCW – Annual reports
100% compliance with annual reporting requirements
From January 2015 to current, our Office has published 33 audit reports
Blend of financial, federal and accountability audits

4. BARS Manual – Annual Reports
Annual reports to the State Auditor’s Office
Separate certification page removed
Attachments to Schedule 22 are required
Minutes
Expenditure detail reports
Rates and fees
Governing body members
Schedule of Liabilities
Net pension liability + note disclosures
Compensated absences

5. BARS Manual – Schedule 22
How many charge accounts does the District have?
Defined by SAO as credit/charge cards that are store specific (examples include Home Depot, Costco, Staples, etc.)
Asked for risk assessment - Important to have monitoring procedures and policies
Please select on of the options to describe the District’s risk assessment activities. Formal process, informal process or ad hoc.
Formal – Structured, scheduled and documented processes
Informal – Unstructured, undocumented and/or unscheduled processes
Ad hoc – relying on individuals to react to their own perception or assessment of risks

6. BARS Manual - Grants Uniform Guidance – 2 CFR Part 200
§  - Effective/applicability date
For fiscal years beginning after 12/26/2014
Administrative requirements and cost principles apply to new awards and to additional funding (funding increments) to existing awards made after 12/26/2014
Existing federal awards will continue to be governed by the existing terms and conditions of the federal award
BARS Manual updated – 04/21/2016
Changes to the Schedule of Expenditures of Federal Awards
Changes to SEFA note disclosures
There are a couple of significant changes with the Uniform Guidance
Schedule of Expenditures of Federal Awards - Passthrough to subrecipients – Previously, grant amounts that have just been passed through to subrecipients were disclosed on the Notes to the financial statements. With UG, you will need to “display” grant passthroughs on the face of the SEFA
Notes to the SEFA - § , Indirect (F&A) costs – Need to disclose whether an entity elected the 10% MTDC de minimis IDC
§ – Internal Controls
Should follow GAO’s Green Book and COSO standards
Procurement – no significant change with AAAs – Mostly affected higher education institutions and non-profits

7. BARS Manual - Grants Audit Threshold
Increased from $500,000 to $750,000
New guidance reduces the minimum coverage as follows:
Type of Auditee
Current
New
Not low-risk
50%
40%
Low-risk
25%
20%

8. Internal Controls
Internal control is a process to provide a reasonable assurance regarding the achievement of objectives in following categories:
Effectiveness and efficiency of operations
Compliance with applicable laws and regulations
Reliability of financial reporting
Let’s talk about internal controls – What is internal controls? It says in the slides that it is a “process that provides reasonable assurance regarding the achievement of effectiveness and efficiency of operations,” “compliance with applicable laws and regulations” and “reliability of financial reporting.”

9. Internal Controls Someone doing something for a control objective.
Internal control is …
Someone doing something for a control objective.
To be honest, that sounds really complicated! No joke, I’m an accountant and I find internal control definitions too “academic.”
Basically, an internal control is someone doing something for a control objective. Like the picture above, that is me reading through the GASBs to as part of my control procedures to ensure that our audit reports are in accordance with standards. I try to see which ones are going to be applicable for the year and possibly be disclosed on our audit report. Although this is the simple definition of internal controls, there should be a lot of thought put into it.
The COSO Framework and GAO green book have a lot of detailed information about internal controls and they are great resources for developing your internal controls.
These frameworks help you think of stuff like: (1) what needs to be done to achieve the objective?; (2) will the design/control work in all expected situations? (3) If software is relied on, how will it be tested and any changes controlled?; (4) who needs to do what?; (5) how can things go wrong?; (6) is there a potential for fraud/malicious actions? (7) is everyone involved on the same page?; (8) how will I know if the objective is being achieved?

10. Grants and Assets Grants Safeguarding assets
Reporting Completeness and Timeliness
Monitoring
Schedule of Expenditures of Federal Awards
Safeguarding assets
Small and attractive assets
Inventory and asset tracking
Performing inventory
Policies and recordkeeping

11. Disbursements Imprest funds and petty cash
Authorized by a formal resolutions
Replenished and reconciled on a regular basis
Secured and safeguarded
Monitored for allowable costs/expenses

12. Disbursements Credit cards and charge accounts Policies and procedures
Support for disbursements
Assignable credit cards – safeguarding and security
Travel reimbursements
Compliance with RCW – Local governments – Use of Credit cards
Authorization and control of the use of credit card funds
Credit card limits
Cash advances are prohibited

13. Cash Receipting RCW 43.09.240 – Deposit of collections
“Every public officer and employee, whose duty it is to collect or receive payments due or for the use of the public shall deposit such moneys collected or received by him or her with the treasurer of the local government once every twenty-four consecutive hours”
24 hour deposit requirement

14. Cash Receipting Controls over cash receipting Form of payment
Properly identify and document
Sequentially numbered, monitored and tracked
Reconciled with third-party documents
Adjustments
Is there anyone reviewing adjustments for balances?
Reconciliation of cash receipts
Performed by a someone who does not have the responsibility over custody and recordkeeping of cash balances
Segregation of duties and responsibilities

15. Financial Intelligence Tool (FIT)
Indicators
Cash Balance Sufficiency
At least 60 days
Debt Load
Less than 12%
Change in Cash Position
Greater than 0%
Operating Margin

16. Financial Intelligence Tool (FIT)
Web-based FIT
Review past data
Forecast
Edit audited financial data
Annotate and graph data
Compare to peers

17. Agency Updates Audit Connection – Spring 2016 Billing Rate for 2017
Annual Filing Deadline
FIT Award
Performance Audit Funding
Changes in Billing Invoices
New GASB Implementation Worksheet
Cyber Security Alert
Newly Elected Officials Video
Two New Offices from One in Eastern Washington
Billing Rate for 2017
Another reporting season concluded on 5/29/2016 and for the third straight year we saw an increase in timely reporting. 
Here is a quick snapshot of timely reporting the past 3 filing seasons:
2013: ,372
2014: ,548
2015: ,603

18. Contacts Kristina Baylor Program Manager
(425) X101
Katie Cristelli Megan McFarlane
Conservation District Specialist Conservation District Specialist
(360) (360) X103
Philip Mendoza
Assistant Audit Manager
(360)

19. Resources BARS Manual Financial Intelligence Tool (FIT)
Upcoming financial statement checklist
Supplemental Schedules
Financial Intelligence Tool (FIT)
Training and Online Training Library
Resource Database
Online Reporting Templates
Municipal Research and Services Center (MRSC)

20. Questions?