1. Audit Process and Requirements Overview ASTRA May 17, 2012 1

2. Office of Management Analysis and Standards MAS Martin Eckhardt, Director Delegated Audit Team Janette Martin, Team Lead – Ginnie Schirmer – Lance Gagelman – Gary Bond – Mark Handshy 2

3. Delegated Audit Team Duties Agency Reviews Review/Approval of Non-Delegated Audit Transactions Resource to agencies Claims – Prior FY – Property Damage/Loss 3

4. History of Delegated Audit Delegated Audit AuthorityFiscal Year Began# Of Participants Under $500FY 199516 Under $1,000FY 199819 Under $2,000FY 200128 Under $5,000FY 200420 Total Delegated AuditFY 2004Regents Universities Under $5,000FY 2011All agencies 4

5. Policy vs. Procedure SMART & changes to DofA organizational structure created separation of policy and procedures. –Policy MAS responsibility –Procedures SMART team responsibility – within Office of General Services 5

6. Agency Reviews (Audits) Two Review Perspectives Under SMART –MAS Accounting transactions –Procurements & Contracts P-Card transactions MAS Agency Reviews –FY 2011 audit year First year with SMART 1/3 of agencies in a 3-year cycle 6

7. Agency Reviews During FY 2012 – Began FY11 agency reviews on Sept. 2, 2011 Started with 3 small agencies to work through our revised audit plan with SMART – 23 agency reviews in progress or completed as of May 11, 2012 – Will limit agency reviews during fiscal year end and budget season and work with agencies to continue reviews as schedules allow. 7

8. Agency Review Components Random Sample of Agency Transactions –Accounts Payable –Travel & Expense –W-9’s Compliance Review of Transactions Capital Assets Local Funds Accounts Receivable 8

9. AR LPA Audit Department of Administration(DofA): –To help ensure State agencies are aware of, implement, and follow Statewide policies for accounts receivable, DofA should: Periodically remind all State agencies about the policies to be followed on collection activities, and the availability of the Setoff Program. 9

10. AR LPA Audit Department of Administration(DofA): Periodically provide training, workshops, or other informational sessions to help State agencies become more familiar and comfortable with proper accounts receivable management. Periodically check State agencies’ adherence to the Division’s policies on collection activities. Consider reviewing documentation to verify agencies’ reported accounts receivable on a sample basis. Encourage agencies to write off debts when they determine that it is doubtful the debts will ever be collected. 10

11. Accounts Receivable PM 8,001- Management of Receivables –Agency tracking of Accounts Receivable by either SMART Accounts Receivable module or Agency maintained system or file –Report on DA-32 should include Amounts due from governmental units Taxes receivable Amounts due from other funds - e.g., overpayments owed to a particular fund by another fund in the same governmental unit for goods sold and services rendered Loans receivable Miscellaneous/Other receivables – e.g., overpayments by an agency subject to refund, interest and penalties (fines) assessed against an individual or a corporation, etc. 11

12. Accounts Receivable PM 8,001- Management of Receivables –Minimum Collection Procedures for A/R Collection attempts –Apply when 30 days past due from the date receivable was to be collected. Documentation of collection –For amounts over $25, three collection attempts should be made (a record must be kept for each attempt to collect.) If debt is still uncollected –If the payment is 60 days past due, deny further credit. –Should submit the debt to the Setoff Program or write-off the debt. 12

13. Accounts Receivable PM 8,001- Management of Receivables –Minimum Collection Procedures Write-off debt when PM 8,001 criteria is met –a valid receivable exists –the receivable is past due –the agency has complied with the minimum collection procedures. –If agency elects to not use PM 8,001 and follows an alternative policy instead, that policy should be approved by the Director of MAS. 13

14. Agency Review Components Desk Audit –Delegated Audit review (A/P, T&E) –Accounts Receivable –W-9’s –Submit support documents via thumb drive, CD, scanned sent with e-mail, or paper copy Do not send information that is in SMART On-Site Audit –Capital Assets –Local Funds 14

15. Authoritative Hierarchy –Statutes (K.S.A.s) –Regulations (K.A.R.s) –Policy (PM) http://www.da.ks.gov/ar/pm/Default.htm http://www.da.ks.gov/ar/pm/Default.htm –Informational Circulars 15 Compliance Review of Transactions

16. Agency Reviews Agency Preparation for Review –Vouchers in Sample Selection Include voucher number on all associated support. –Provide support evidence of receipt of goods or services. –If submitting.pdf file, please have documents in voucher number order as shown on sample list (file is not searchable.) –Do not send information that is in SMART Vouchers created in SMART should contain appropriate information regarding payment. May need additional information from what was included on PO. –Accounts Receivable Review PM 8,001 for clear understanding of receivables 16

17. Agency Reviews Agency Preparation for Review –Local Funds Authorized funds maintained at agency level for payments requiring immediate attention. Three types of local funds –Petty Cash (PM 10,752) –Use DA-71 to establish and update –Change Fund (PM 9,100) –funded through Imprest Fund –Use DA-74 to establish and update –Check Cashing Change Fund (PM 9,101) –Funded through Benefit or Canteen Funds –Use DA-74A to establish and update 17

18. Agency Reviews Agency Preparation for Review –Local Funds Reconcile local funds as needed, monthly at minimum. Be sure to update names associated with local funds as they change. All local funds must be reconciled as of June 30 th each year 18

19. Agency Reviews Agency Preparation for Review –Inventory Agencies need to closely review and update Capital Asset listing. –Review asset disposal in SMART. Have agency asset policy updated (PM 13,001) - –Each state agency is responsible for establishing a written policy for safeguarding financial and physical assets and for being alert to possible exposures, errors and irregularities. The agency policy should cover at the minimum, the responsibility of the property management officer, property criteria, ownership, usage, handling of stolen assets and disposal of property. –Please provide audit information in timely manner. 19

20. Agency Reviews Agencies have two opportunities to respond to audit findings –Initial findings on audit findings worksheet are provided to agencies electronically or during on-site audits. –Audit letter response if needed 20

21. Agency Reviews As changes in policies are formally communicated to agencies, our goal is to audit for these changes going forward. 21

22. da.ks.gov/ar/genacct/Audit/Delegated.htm – Delgated Audit Authority Program Overview – Agency Responsibilities – Accounts and Reports Responsibilities – Delegated Audit Procedures – What can the agency expect during the annual audit 22 Delegated Audit Website

23. PM 14,002 – Fiscal Year Closing of Obligations –All interfunds must be processed within the same fiscal year as initiated. –FY Determination for Expenditure Transactions: Commodities & Capital Outlay – date order is placed Credit Card Purchases – Procurement Cards (P-Cards) All purchases posted to cardholder accounts on the June P- card statement are old FY business. Purchases posted after June statement cutoff through June 30 either old or new FY business – agency option. – Other – date purchase is made 23 Fiscal Year End

24. PM 14,002 – Fiscal Year Closing of Obligations –FY Determination for Expenditure Transactions: Dues, Memberships & Subscriptions – beginning date of membership or subscription period Maintenance or Ongoing Service Contracts – beginning date of time period covered by payment Other Contractual Services – date services provided Postage – Payments entered in SMART after 6pm on June 30 considered new fiscal year business Professional Services – date services rendered 24 Fiscal Year End (cont’d)

25. PM 14,002 – Fiscal Year Closing of Obligations –FY Determination for Expenditure Transactions: Projects – beginning date of project Rental of Equipment – ending date of agreement; payments made according to terms of agreement Rental of Space in Buildings/Lease of Land – beginning date of time period covered by payment; payments made according to terms of lease agreement Repairing & Servicing of Buildings/Equipment – completion date of job 25 Fiscal Year End (cont’d)

26. PM 14,002 – Fiscal Year Closing of Obligations –FY Determination for Expenditure Transactions: Salaries & Wages – date payment is made (pay date) Telephone/Copiers – determined by method of billing –If vendor bills before service is received, begin. date of service –If vendor bills after service is received, ending date of service Travel –Date the segment of travel took place –If consecutive travel begins in old FY and ends in new FY, the entire cost may be charged to the new FY Tuition – beginning date of service Utilities – ending date of service 26 Fiscal Year End (cont’d)

27. Contact Information SMART Technical Questions – Submit Help Desk ticket Policy Questions – Email or Call Delegated Audit Team 27 Janette Martin Gary Bond Mark Handshy Ginnie Schirmer Lance Gagelman Martin Eckhardt Janette.Martin@da.ks.gov Gary.Bond@da.ks.gov Mark.Handshy@da.ks.gov Ginnie.Schirmer@da.ks.gov Lance.Gagelman@da.ks.gov Martin.Eckhardt@da.ks.gov 785-296-2708 785-296-7217 785-296-4799 785-296-7021 785-296-2255 785-296-2661

28. Questions ? 28