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CHAPTER 16 SYSTEMWIDE REVENUE BONDS (SRB) AUDIT REQUIREMENTS
TABLE OF CONTENTS PAGE DESCRIPTION 16-2 Introduction 16-3 Key Dates/Deadlines 16-4 SRB Fluctuation (Flux) Analysis (Q&A) 16-4 TM1 Variance Q&A Form: Overview 16-6 TM1 Variance Worksheet 16-8 TM1 Variance Q&A Form: Accessing Accounts Requiring Flux Explanations 16-9 TM1 Variance Q&A Form: Variance Explanation Instructions 16-12 SRB Related Leadsheets 16-13 Transfer Leadsheet 16-15 Proper Legal Reporting – Student Union 16-16 Proper Legal Reporting – Auxiliary Organizations 16-17 CSU Funds in SRB 16-19 SRB Contacts
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INTRODUCTION REVENUE BOND ACT – AUDIT REQUIREMENTS The State University Revenue Bond Act of 1947 (Education Code Section 90010) gives CSU the authority to issue revenue bonds to fund specific self-supporting programs. The statute has enabled CSU to finance student housing, student unions, parking facilities, health facilities, continuing education facilities and certain auxiliary organization facilities. In 2003, CSU initiated its Systemwide Revenue Bond program (SRB) under the authority granted in Ed Code 90010. The SRB program is designed to provide lower cost debt and greater flexibility to finance revenue bond projects. Additionally, the SRB program pools several sources of revenue as the pledge for the revenue-producing projects rather than relying on specific pledged revenues to support specific debt obligations The Revenue Bond Indenture requires that an audit of the bonds be conducted each year. The audit must be completed mid-October to satisfy the many deadlines imposed by interested parties. Given the Bond indenture requirements, the SRB audit is run concurrently with the Systemwide audits.
SCOPE AND MATERIALITY The SRB audit is a subset of the larger CSU Consolidated Audit. The activity that comprises the SRB projects (Housing, Parking, etc.) is captured within a defined set of CSU Funds. The SRB team begins with campus’ specific legal-basis SRB project CSU Funds data from FIRMS, and then incorporates them with appropriate campus’ GAAP adjustments. See the SRB CSU Fund matrix in 16-11 of this chapter. The SRB work papers are then grouped into SRB project groups (Housing, Parking, etc.) for audit purposes. Generating work papers at the SRB project groups also results in significantly lower ‘materiality threshold’. To the extent possible, the SRB audit team tries to utilize campus lead sheets that were generated for the CSU Consolidated audit. In order for the leadsheets to be used for SRB, the PBC’s (Prepared by Client) must have CSU Fund identifiers and subtotals to enable the SRB team to extract the subset needed. It is important to note, that consolidated figures reported in campus reporting packages do not contain the level of detail required to be used by the SRB staff and audit teams.
KEY DATES/DEADLINES
AUGUST 1, 2016 2 .
The CO SRB team will provide fluctuation analysis questions to each campus. (Note: this step compares 6/30 legal-basis data, prior year versus current year).
AUGUST 25, 2016 Reporting packages via SharePoint to SFSR by noon. The SRB team will access campus files saved to SharePoint therefore a separate is no longer required.
AUGUST 29, 2016 The Campuses are to submit: □ SRB Specific Lead sheets- PBC #54, 55, 103, 126, 133, 145, and 152 via SharePoint. The SRB team will access campus files saved to SharePoint therefore a separate submission or email is no longer required. □ Unaudited GAAP entries for all funds (query dump) San Diego Only. The SRB team will access campus files saved to SharePoint therefore a separate submission or email is no longer required. Legal-basis fluctuation analysis via TM1 Return of Surplus (Student Union Operating Expenses) Documentation via Sharepoint The CO SRB team will run campuses GAAP Query via CFS. No campus action is required.
SEPTEMBER 12, 2016 The Campuses are to submit their final audited SRB required lead sheets and audited GAAP Entries (San Diego only), via SharePoint to CO. Campuses are to notify the CO SRB team of any final GAAP adjustments affecting SRB CSU funds (refer to matrix in 16-11). The CO SRB team will run the final campuses GAAP Query via CFS. No campus action is required.
SEPTEMBER 23, 2016 The CO SRB team will submit the draft SRB Financial Statements to KPMG.
OCTOBER 14, 2016 SRB Financial Statements issued
SRB FLUCTUATION (FLUX) ANALYSIS (Q&A) Each year, KPMG assigns a materiality threshold for the SRB Programs (i.e. Housing, Parking, etc.) per SRB line item. Campuses are required to provide explanations via TM1. The SRB team may require additional explanations upon review of the campus legal data submitted. Thus the materiality threshold established by KPMG for a given year may differ from the threshold used by 16.00-3 GAAP Manual | Systemwide Revenue Bonds (SRB) Audit Requirements | June 30, 2016 .
the SRB team. The additional explanations which result from a lower threshold enable the SRB team to better evaluate data presented in the SRB financial statements. The additional information gathered has also resulted in fewer inquiries by KPMG to the campuses.
TM1 VARIANCE Q & A FORM
The CO SRB team will continue the use of TM1 for the legal basis fluctuation analysis. In April 2014, a new form was developed in TM1 to enable campuses to download a variance worksheet into Excel. This new worksheet can be filtered and sorted by program, and forwarded to campus contacts to be completed. Responses from the completed excel forms can be copied and pasted into the original variance worksheet within TM1. The SRB menu options within TM1 have the new worksheet options:
1. Once the new variance worksheet is selected:
2. The report will default to the current activity period, your campus and all SRB CSU funds.
3. You will have the ability to snapshot to excel to get all programs and all CSU funds. 4 .
4. You can also filter for a specific program.
5. Once you have selected your criteria, you will export to Excel.
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A training video and transcript is available with instructions for completing the variance worksheet. Link to video
The new variance worksheet can only be used for initial variance responses. Once a campus has submitted a response for a specific line item, the field is locked and additional comments or follow up comments must be entered in the Variance Q & A form. Instructions for the Variance Q&A form have not changed and are included in this chapter.
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1. Once you select the Variance Q & A Form you will be directed to a separate Web based form that requires an additional login.
ACCESSING ACCOUNTS REQUIRING FLUX EXPLANATIONS 2. Once logged in, select your campus and click Refresh.
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3. Your campus’ SRB Programs Requiring Variance Explanations will be displayed.
4. Select a program’s hyperlink to be taken to the list of Funds and FIRMS object code requiring explanation.
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VARIANCE EXPLANATION INSTRUCTIONS 5. For each FIRMS Object Code listed, you must complete a Variance Explanation response for the fluctuation between the prior year and the current year (unadjusted).
If the new variance worksheet has been completed. Your initial responses will be shown in the discussion history section.
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Note: If your initial responses were entered in the new variance worksheet, items #6-8 will be completed in that worksheet. The instructions below are if the Variance Q & A form are being used for initial reponses
6. Please select a Variance Cause from the drop down menu. However, since further justification is generally need, please also provide a short explanation in the Variance explanation section. Explanations should include: the name of the project impacted, quantified variances, and explanations for changes in an accounting process. If you are referring to a CO directive please provide directive name, ADNOAT number, Legal Manual chapter, etc.
7. In the Variance Details section, Please check the box if the fluctuation is a result of an error and needs to be corrected. Also, use the check box to indicate if it has been posted and the amount. Lastly, please provide a variance explanation for the correction.
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8. Lastly, please provide a variance explanation for the correction. If you have posted a correcting entry in the XXGAP business unit, please provide the GAAP AJE number in your Variance Explanation box. If you intend to pass on the adjustment and not record it in the XXGAP business unit due to immateriality, please provide qualify with a non-GAAP policy explanation statement including the dollar amount.
9. Once your explanation has been completed, click the green plus sign to “Add Comment”.
10. Your explanation should then appear in the discussion history. 11. Click Save
12. Your explanation should then appear in the last comment section on the Fund List page. 13. Once you have completed all responses, for all programs you will save. 14. Once saved you should return to the Program List Screen. 15. Then click Notify Chancellors office to submit your responses
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16. Once your responses have been reviewed by the CO SRB team you will receive an email notifying you that your responses have been received. It will also indicate if there are additional questions you need to respond to via TM1.
REQUIRED SRB LEAD SHEETS The following PBCs were developed to assist the CO SRB and KPMG SRB Audit team in capturing all activity pertaining to the various SRB projects. Given that SRB activity is reported in a defined set of CSU funds, these lead-sheets enable the SRB team to capture campus’ year-end GAAP adjustments and record the activity within the required SRB project work-papers for the purposes of developing consolidated financial statements for the SRB audit. Additionally, the information provided by CSU fund, assist both the CO SRB team and the KPMG SRB Audit team in extracting SRB project activity from reported campus totals.
PBC #54- Investment Income Lead Sheet (Exhibit 18) PBC #55 – Legal to GAAP Roll Forward of CSU Pool Investments (Exhibit 32) PBC #103 - Unearned revenue reasonableness test (Exhibit 12) PBC #126 - Tuition and fees lead sheet (Exhibit 33) PBC #133 -Sales and services of auxiliary enterprise revenues (Exhibit 16) PBC #145- Liability lead sheet (Exhibit 45)
PBC #152 – Detail of Transfers (Exhibit 47) if applicable (Note: campuses will receive Detail of transfers form if it is required)
ALL SRB EXHIBITS CAN BE FOUND IN CHAPTER 9 PBC #144 - CAMPUS GAAP ENTRIES CO SRB team will run a query via CFS to obtain all GAAP entries for the campuses. However, the San Diego campus must continue to provide a Query dump of their GAAP entries. The format required will be provided to the campus. GENERAL NOTES FOR ALL PBCS SRB PBCs are required format schedules and may not be modified. CSU funds should be provided for all information. On sample lead-sheet, if CSU fund is not listed please add when necessary. Please refer to list of applicable SRB funds on page 17 and ensure non SRB funds are not included in SRB only sections on the PBC. Legal balances MUST equal balances reported in FIRMS in total and by CSU fund. Please include each GAAP entry in a separate column with appropriate reference and Adjusting Journal Entry (AJE) number. □ The AJE number provided should match exactly the Journal ID in your XXGAP ledger. 12 .
□ Please provide a brief description of the GAAP entry. □ GAAP entries that do not impact SRB funds may be aggregated in one column.
TRANSFER DETAIL PBC & PROCESS SRB will run SW Campus Actual Transactions in DW at a specific date prior to Interim audit and again at year end. Campuses with identified transfers will receive a workbook from the SRB team which will contain a summary of transfers on the first tab and the “Detail of Transfers” PBC on the second tab. Due dates for the workbook will be included in the correspondence. The San Diego campus will receive a request for a detailed transfer summary and then specific instructions as to which transfers require an explanation on the PBC.
SAMPLE OF PBC #152 (EXHIBIT 47)
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SAMPLE OF DATA WAREHOUSE TRANSFER SUMMARY REPORT
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PROPER LEGAL REPORTING IS IMPORTANT STUDENT UNION PROGRAM The bond indenture recognizes mandatory Student Body Center Fees as gross revenues and the offset of related Operating Expenditures paid by those fees. Furthermore these operating revenues and expenditures are used to calculate a campuses debt service coverage ratio (DSCR). Thus distinct firms object codes should be used to record this activity. Firms object code 504008 should be used within CSU fund 534 to record Student Body Center Fees. For operating expenditures campuses should use 660045 (Return of Surplus) within CSU fund 534. Although the term Return of Surplus may appear outdated the category it represents is not. Student Unions are generally operated by auxiliary organizations. Through a budget process campuses release student union fees to the auxiliaries to pay for the unions operating expenditures. This expense is recorded to object code 660045. Subsequently campuses are required to submit 100% supporting documentation to support these amounts. The submission date for required support is August 29, 2016. All documentation must be uploaded via Sharepoint. Student Union Operating Expenditure Documentation includes: • Copies of Operating Expenditure Checks • Budgets • Check Requests • Memorandums
In recent years a few campuses have changed the process in which they record the Student Union Operating Expenditures. It is important to note that the Operating Expenditures paid by the Student
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Body Center Fees must still be clearly identified. Identification of these expenditures as well as support should be submitted to the CO SRB team on the Return of Surplus due date. Submissions must reflect legal expenditure information prior to the GAAP close. This is critical because in GAAP the expenditures would map to natural class 722004, and no longer be visible to the SRB team. The SRB team developed a template that will be sent to those campuses that operate their Unions or who use accounts that differ from 660045.
SAMPLE OF TEMPLATE DEVELOPED FOR RETURN OF SURPLUS DETAIL:
AUXILIARY ORGANIZATIONS In the legal manual, (Chapter 10, Sec 3.2 & 3.3) specific instructions for recording Capital Leases and Loans activity is located. It is important that the proper FNAT keys and Object codes are used for recording Capital Leases and Loans for Auxiliary Organizations.
Prior to the campus GAAP close, please ensure the correct coding for SRB related activity: CSU Fund 537 SRB Related Activity 16 .
□ FNAT #128893 □ Project Code SRB000 Recording Capital Lease Activity □ Principal Payments Firms Object Code 580098 □ Interest Payments Firms Object Code 508092 Recording Capital Loan Activity □ Loan Payments from Aux (Prin. & Int.) Firms Object Code 250002
CSU FUNDS IN SRB
SRB Financed CSU Funds (0576) 221 – DCF – Housing 222 – DCF – Parking 223 - DCF-Auxiliary Facilities (Used for HEALTH Facilities) 224 – DCF – Campus Unions 228 - DCF-Auxiliary Organizations 229 – DCF – Extended Education 230 – DCF – Academic Capital Outlay
Operating SRB CSU Funds
441 – TF – Continuing Education Operation 444 – TF – CE/EE Campus Partners 452 – TF – Facility Revenue Fund-Health Facilities Fees 472 – TF – Parking Revenue Fund-Parking Fees 531 – TF – Housing-Operations and Revenue 534 – TF – Campus Union-Operations and Revenue 537- TF-Auxiliary Org-Operations and Revenue
Non- Recurring Maintenance and Repair (NRMR) SRB CSU Funds 16.00-17 GAAP Manual | Systemwide Revenue Bonds (SRB) Audit Requirements | June 30, 2016 .
017 – General Fund Capital Outlay 443 – TF – Continuing Education Maintenance & Repair 454 – TF – Facility Revenue Fund -Maintenance & Repair 474 – TF – Parking- Maintenance &Repair 486 – TF – Academic Deferred Maintenance 532 – TF – Housing- Maintenance &Repair 535 – TF – Camp Union- Maintenance &Repair
Capital Improvement (CIMP) SRB CSU Funds 017 – General Fund Capital Outlay 442 – TF – CE/EE Construction 453 – TF – Facility Revenue Fund - Construction 473 – TF – Parking Revenue Fund – Construction 487 – TF – Academic Capital Improvement 533 – TF – Housing-Construction 536 - TF-Campus Union-Construction
SRB CONTACTS Office of the Chancellor □ Kelly Cox, Associate Director, Financial Services – Accounting . (562)-951-4611; [email protected] □ Terri Williams, Manager System-wide Revenue Bonds and Capital Projects. . (562) 951-4386; [email protected] □ Angie Renaud, Accountant II . (562) 951-4613; [email protected] 18 .
□ Dagoberto Escobedo, Accountant II . (562) 951-4561; [email protected]
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REVISION CONTROL
Document Title: CHAPTER 16 – SYSTEMWIDE REVENUE BONDS (SRB) AUDIT
REVISION AND APPROVAL HISTORY
Section(s) Summary of Revisions Revision Date Revised Pg. 16.00-3 Updated the key dates/deliverables April 2016 Pg. 16.00-13 Removed PBC81 as SRB required PBC. ( SW requirement) April 2016 Student Union Return of Surplus submission method changed to Pg. 16.00-15 April 2016 SharePoint. Pg. 16.00-17 SRB CSU Funds updated April 2016 Pg. 16.00-19 Updated the SRB contact list April 2016 Pg. 16.00-3 Updated the key dates/deliverables April 2015 Pg. 16.00-6 Added link to instructional video April 2015 Pg. 16.00-11 Added PBC 81 as required PBC April 2015 Pg. 16.00-17 Updated the SRB contact list April 2015 New Variance Worksheet added for initial input of fluctuation Pg. 16.00-5 April 2014 responses. Pg. 16.00-6 New Transfer Leadsheet April 2014
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