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May 22, 2008 GAAP Reporting Workshop
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Preparing Your Stand-AloneFinancial Statements
Campus stand-alone financial statements include the following components:
Management’s discussion and analysis (MD&A)
Statement of net assets
Statement of revenues, expenses, and changes in net assets
Statement of cash flows
Notes to the financial statements
3
May 22, 2008 GAAP Reporting Workshop
© 2
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Preparing Your Stand-AloneFinancial Statements, continued
Key Dates (refer to Audit Timeline) Stand-alone proforma financial statements available on CO
website – September 8, 2008
Campus to provide complete draft stand-alone financial statements (including management approved MD&A) to KPMG for review – November 24, 2008
Financial statements issued – January 15, 2009
Campus must submit a complete draft of the financial statements, including MD&A, to KPMG in order to begin the review process
Access to technical accounting literature and resources to help ensure successful preparation of GAAP financial statements (refer to Chapter 14)
4
May 22, 2008 GAAP Reporting Workshop
© 2
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8 K
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Preparing Your Stand-AloneFinancial Statements, continued
Must use electronic template of pro forma financial statements (refer to Chapter 12) to begin the preparation process
Option of 1 year or 2 year comparative presentation
Electronic template should be tailored as applicable to the individual campus
MD&A If opting for 1 year presentation, presentation of current
year and prior year financial data is still required
Campus is responsible for drafting the MD&A. KPMG cannot assist under GAO Independence Standards.
5
May 22, 2008 GAAP Reporting Workshop
© 2
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8 K
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Preparing Your Stand-AloneFinancial Statements, continued
Based on the significance of the discretely presented auxiliary organizations to the financial reporting entity, the campus must evaluate whether certain auxiliary information should be included in the notes to the financial statements.
KPMG campus teams must revise the opinion accordingly based on which accounting firms audit which auxiliary organizations (i.e. KPMG or other auditors)
6
May 22, 2008 GAAP Reporting Workshop
© 2
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8 K
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MD&A - What is it?
Required supplementary information (RSI) which precedes the audited financial statements
Management’s opportunity to communicate key financial activities of the campus
MD&A requirements Minimum and maximum requirements
General rather than specific
See “Guide to Preparation of MD&A” (Chapter 7, Appendix 1) for discussion of required elements(GASB 34, par. 11)
7
May 22, 2008 GAAP Reporting Workshop
© 2
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8 K
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MD&A Overview
Discussion of the financial statements including the relationship of the statements to each other
Analysis of financial activities based on currently known facts, decisions or conditions
Discussion of current year results in comparison with prior year, with emphasis on the current year
Use of charts, graphs, and tables to facilitate understanding of management’s analysis
8
May 22, 2008 GAAP Reporting Workshop
© 2
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8 K
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MD&A Overview, continued
Focus of analysis should be on the campus as the primary reporting entity, with component units (auxiliary organizations) included if considered significant
Reference to the component unit’s separately issued financial statements, when appropriate
9
May 22, 2008 GAAP Reporting Workshop
© 2
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8 K
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MD&A Overview, continued
Presentation of condensed financial information comparing current year to prior year for each year presented
Overall financial position and result of operations
Description of significant capital assets and long-term debt activity
Changes in bond ratings
For comparative financial statements, must provide two-year comparative analysis (i.e. 2008 vs. 2007 and 2007 vs. 2006)
Description of currently known facts, decisions, or conditions that are expected to have a significant financial impact
10
May 22, 2008 GAAP Reporting Workshop
© 2
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8 K
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firm
of
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Preparation of MD&A“Guide to Preparation of MD&A” (refer to Chapter 7,
Appendix 1)
Starting point – comprehensive analytical review / variance analysis from your reporting package
Identification of significant changes, and the reasons for significant changes, from the prior year
Coordination with appropriate campus personnel to identify: Underlying causes for the changes
Key decisions, transactions, events and conditions
Expected changes, based on existing campus decisions and circumstances (i.e. known facts). Examples include:
Changes in enrollment
Campus master plan
Debt
New construction
11
May 22, 2008 GAAP Reporting Workshop
© 2
00
8 K
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the U
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firm
of
KPM
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Preparation of MD&A, continued
Completion of MD&A Checklist (included in Chapter 7, Appendix 1)
Helps management ensure all required elements have been included in the MD&A
Review and approval signature by appropriate level of management
Completed and approved checklist must be provided to KPMG campus team along with draft MD&A
Other resource tools 2007 financial statements for each campus issued to date –
available on CO website
Must use pro-forma financial statements (refer to Chapter 12) - 1 year and 2 year comparative presentations