Auditor s Guide Sage 100 Fund Accounting. Sage Customer, Southern Polytechnic State University Foundation

Transcription

1 Auditor s Guide Sage 100 Fund Accounting Sage Customer, Southern Polytechnic State University Foundation

2 Table of Contents Introduction... 3 Database Security... 3 Chart of Accounts Structure... 5 Audit Trail... 6 System Audit Trail... 6 Summary Organization Audit Trail... 7 Advanced Organization Audit Trail... 8 Transaction Audit Trail... 9 Transaction Review and Posting Cash Management Property and Equipment Payroll Transactions Allocations Reports Standard Accounting Reports General Ledger Reports Trail Balances Posted Transactions Reports FASB and GASB Reporting Budget to Actual Reporting and Budget Controls Direct Access to the Database Tables The Tables an Auditor Will Use Most Frequently Other Assistance

3 Introduction This guide is designed to show you how a true fund accounting system will help you to more efficiently audit and advise your nonprofit and government clients. Sage 100 Fund Accounting addresses specific needs such as tracking and reporting on individual funds from multiple sources and complying with FASB, GASB, and other reporting requirements. With its flexible system setup and built-in reporting, Sage 100 Fund Accounting helps your organization master its critical accounting and administration tasks. With 30 years of expertise in the nonprofit and government sector, this product provides more than accuracy; it gives the quality and service that result in greater accountability, effective management of funds, and more time to focus on the organization s cause. Sage 100 Fund Accounting provides many features that are of interest to you as an auditor. Some of the capabilities provided are: Comprehensive security for the organization s database by user, function, and account. A table-driven chart of accounts structure that offers an unlimited number of reporting dimensions. The segmented chart of accounts makes tracking donor-imposed restrictions and board-approved designations of funds manageable. A powerful built-in report writer with consistent setup selections for transaction analysis and financial reporting that results in unprecedented ease of use. Includes FASB- and GASBcompliant reporting and drill-down functionality. Account inquiry tools featuring drill-down from account balance to source transactions. User-defined fields to track attributes and performance data on records such as vendors, customers, programs, and source transactions. Extensive comparative budget reporting. An extensive audit trail for transactions, system changes, and modifications to master records throughout the system. Direct export to Excel throughout the system to facilitate spreadsheet analysis. Ability to establish permissions to access the data tables directly using Crystal Reports, Microsoft Access, or any other ODBC-compliant application, making special queries or auditsampling easy. Database Security A user accesses the Accounting system with an established user identification and password. These IDs and passwords can only be created in the Administration application by an authorized user. Once within Administration, select Security > Maintain Users from the menu. The resulting form allows you to add user IDs, user names, and user passwords. 3

4 After creating a user ID and name, each user can be granted rights to the Sage 100 Fund Accounting menu items. Rights can be established for groups of users or individual users. Rights assigned are cumulative. From the menu, select Security > Setup System Menus to grant rights to relevant menus. Figure 1. User Setup Security Form After you specify a user, the menu options are displayed in an outline format. This form initially displays the main menu items only. You can specify different rights for your users at each menu or submenu selection. The rights specify which actions the user may perform at each menu selection. The rights and a brief description follow: View Existing Records: Recall a previously entered record Edit Existing Records: Modify a previously entered record Delete Existing Records: Delete a previously entered record Add New Records: Create new records Process Records: Perform calculations and initiate system actions 4

5 Although Sage 100 Fund Accounting greatly assists with system security and confidentiality by providing the means to control menu and process actions, adequate internal controls must also be built around the system to ensure integrity of the data, to properly segregate duties, and to address other internal control issues. Read-only access directly to the database tables may also be assigned using the SafeKey section of the organization menu settings. Once you have created a user and granted SafeKey rights, you can use Microsoft Access or any other ODBC-compliant application to access the information in a Sage 100 Fund Accounting database. Chart of Accounts Structure The core of any accounting system is the chart of accounts, and understanding the Sage 100 Fund Accounting chart of accounts is essential for generating the reports you need. Sage 100 Fund Accounting offers a table-driven chart of accounts, which allows users to define each segment in their account structure, thereby customizing the application to fit their unique reporting requirements. The system allows you to create as many reporting segments as are necessary to meet the needs of each organization. Commonly utilized segments include: Fund, General Ledger, Grant, Function, Program, Department, Location, and Restriction (for FAS 117 compliance). As segments are added during the database setup, a segment type must be selected so that the system can assign a set of entry validation rules for the segment. These entry validations ensure that data entry is complete before it will be recorded in the accounting system. With accurate data entry, even the complicated reporting requirements that nonprofit and government organizations require becomes easy to accomplish. The general ledger segment is required for use in natural account classifications. A fund segment can also be established, requiring entries to balance and allowing the user to create automatic inter-fund account entries. Other segments can be set to require full account balancing; to track only revenues and expenditures; or to track revenues, expenditures, and net assets. Limitations placed on contributions by donors can easily be tracked in the system with a segment for restriction tracking. As contribution revenues are recorded in the system, the user will identify if the funds are unrestricted, temporarily restricted, or permanently restricted. Furthermore, as assets are released from restriction they can easily be reclassified as unrestricted. Tracking and reporting of net assets becomes simple, as the restriction classifications will carry into net assets upon close, ensuring accurate balances. Each segment is completely independent of the other segments the software does not string together each segment to form one account code. If a user wants to add a new department code to their department segment, they can enter just one single code. Then they can use that new department code with the other existing segment codes. Rules can also be configured to limit which accounts the system permits to be used in combination. 5

6 Audit Trail The system keeps comprehensive logs of users accessing the system, activities performed within the system, and all transactions recorded. With the Advanced Security module, the system also provides the ability to track changes to master records including vendors, customers, employees, and user organization security. System Audit Trail For a nonprofit organization, transparency and accountability are crucial. Having a thorough and reliable audit trail will ensure that compliance and credibility are priorities across the organization. At the system overview level, the System History form tracks and logs changes to each database. To view the System History form, enter the Administration application, then select Security > Manage Audit Trails > System Audit from the menu. On the resulting form, the system history can be viewed and printed. Users can also filter for specific information within the form itself. This history provides information about additions, modifications or edits, and deletions, as well as who has accessed the system, what time they accessed the system, and whether the access was successful. This information is not permanent and may be deleted by an authorized user. Figure 2. System Audit Form 6

7 Summary Organization Audit Trail Whether during an audit or as best practices for internal controls, it is important to identify and analyze changes at the organization level. Whether due to errors or potential fraudulent activity, ongoing reporting and monitoring will keep the organization at the forefront of accountability and control. There is also a Summary Organization Audit form that tracks and logs changes to each database. To view the organization history, enter the Administration application and select Security > Manage Audit Trails > Summary Organization Audit from the menu. On the resulting form, the organization history can be viewed, filtered, and printed. This history provides information about additions, modifications or edits, and deletions of maintenance items on the Accounting menu and organization items on the Administration menu. This information is not permanent and may be deleted by an authorized user. Figure 3. Summary Organization Audit Form 7

8 Advanced Organization Audit Trail During an audit, having the ability to pinpoint errors or suspicious activity is essential. With the Advanced Organization Audit form, users can easily monitor and analyze activity surrounding key records that are areas where fraudulent activity is a potential concern. This functionality is included with the Advanced Security module for Sage 100 Fund Accounting. Users have the ability to turn advanced auditing on by record within Administration > Security > Manage Audit Trails > Set up Advanced Organization Audit. To view the Advanced Organization Audit form, enter the Administration application and select Security > Manage Audit Trails > Advanced Organization Audit. You can filter for specific information (date, record type, action, user ID, etc.) and print information shown in a report format. The Advanced Organization Audit form enables users to track additions, deletions, and modifications to key records throughout the system, including vendors, employees, and customers. Most importantly, the form provides detailed information regarding fields that were changed, including what the previous values were and what the new values are. It also provides transparency into which user made changes, which workstation and application of the product was used, and whether changes were made within the UI or in the underlying database. This information is permanent and cannot be deleted by a user. Figure 4. Advanced Organization Audit Form 8

9 Transaction Audit Trail In your examination of detailed accounting records, you need a system that allows you to easily examine and sample your client s transactions. Transactions that are posted in Sage 100 Fund Accounting cannot be edited or changed corrections are accomplished via subsequent document reversals and the posting of corrected copies. The system thereby provides a complete audit trail of all transactions recorded by each user. This transaction audit trail uses the following data to identify each transaction: Session Number: This is the identifying number for the batch of documents the user is entering and posting. It is required that this session number be unique for each type of entry. Each user can develop their own method of controlling and entering session numbers. For each session number there is an associated description of the transaction series, date, and posting status, all of which can be used to further group sessions. For example, users may want to leave the session date the same as the date the session is created. This allows managers to easily determine when the session was created. Transaction Source: This is the type of transaction. Example transaction sources include Journal Voucher, Accounts Payable Invoice, Void Check, etc. Document Number: This is the number of the document associated with an entry. Multiple documents can reside within a session but must be unique in number within the session. For example, in the case of an Accounts Payable Invoice session, the document number is the vendor s invoice number; for checks, the check number; for journal entries, the voucher number. For each document number there is an associated description and date. For some transaction documents there are additional fields. For example, the Accounts Payable Invoice entry form includes Document Amount, Vendor ID, and Due Date. Each detailed transaction line includes all account code information, a transaction line description, the line amount, Effective Date, and Entry Type. 9

10 Figure 5. Organization Preferences Form Effective Date: This date is used to determine all ledger activity and balances. The range of available effective dates may be controlled by someone in the accounting organization who has access to the Administration application. There he or she can access the Organization > Organization Preferences > Entry Dates form to limit which dates can be entered using the fields Prohibit Prior To, Warn Prior To, Prohibit After, and Warn After. Each of these date fields may be created for each type of transaction. This feature allows users to soft-close accounting periods. Document Date: The document date is used in modules that contain subsidiary ledgers. The Bank Reconciliation module uses the document date to determine whether a transaction is outstanding or cleared by comparing the document date with the reconciliation date and the cleared date. The Accounts Payable, Accounts Receivable, and Encumbrance modules utilize the document date for aging purposes and due date calculation where applicable. Entry Type: This is used to separate transactions into four categories: Normal, End of Year Adjustment, Adjust Opening Balance, and Beginning Balance. All of the Beginning Balance and Adjust Opening Balance entries are usually accumulated and shown on the beginning balance line of reports. All Entry Types may be shown in detail at the request of the person generating a report. End of Year Adjustments can be included or excluded on reports. 10

11 Transaction Review and Posting After entering but before posting an accounting entry, the user can print an unposted transaction journal. Until a transaction is posted, users have the opportunity to make changes to the transaction. At any time, you can obtain a listing of posted transactions. (See the section on report generation for details.) You can use this information to examine hard copy reports, or to export the report data to a preferred file format. If you prefer to examine the data directly, you may do your audit sample testing via an ODBC connection. Cash Management Because nonprofit organizations may have several cash accounts, auditing cash for these organizations is a specialized process. Sage 100 Fund Accounting allows users to maintain an unlimited number of cash accounts within the natural account classification segment (usually called General Ledger ). A single cash account may be used with multiple funds, programs, etc. or limited to a particular fund or program based on user configuration. Cash transactions can be traced in detail through the General Ledger reports, Cash Journal, Check Register, Posted General Ledger Transactions report, and Display Balances > Account Balance inquiries. For systems that include the Bank Reconciliation module, users can also monitor the status of cash transactions with respect to whether they have cleared the bank. Reports detailing the bank reconciliation can be generated as the cash accounts are reconciled, and should be kept on file. Details can also be retrieved within the Bank Reconciliation analysis reports and in Display Balances > Account Balance inquiries. Property and Equipment Sage 100 Fund Accounting offers a Fixed Assets module to assist customers in tracking property and equipment as well as in generating depreciation and disposal entries for the accounting system. Depreciation and disposal entries generated by the Fixed Assets module are entered as special journal entries and can be reviewed in detail from the Asset Transfer Register or Posted General Ledger Transactions report. Inventory reports can be generated from the Asset List report. 11

12 Payroll Transactions Payroll and fringe benefits are often the most significant expenses within a nonprofit organization and will be of particular interest during an audit. Salary expense is a common basis for allocating many indirect costs to programs and other functions. Sage 100 Fund Accounting offers a fully integrated Payroll module that helps organizations properly allocate personnel service efforts. Payroll administration, timekeeping, calculation, and payment generation is performed within the Payroll application. Payroll entries are subsequently transferred to the general ledger in summary or in detail. Payroll transactions are recorded with a special transaction source to denote their origin. Detailed histories of hours worked, wages, account distribution, taxes, and more can be found in the Payroll application s reports. Allocations Accounting entries can utilize pre-defined allocations through the use of Distribution Codes at the time of data entry. Distribution Codes allow allocations to be based on fixed percentages, unit measures, or fixed dollar amounts. Allocations Management is typically used to distribute indirect costs and investment earnings, and with the Allocations Management module, users can perform allocations to move balances after the fact. Allocations can be performed based on fixed percentages, unit measures such as square footage and number of employees, fixed dollar amounts, indirect cost rates or dynamic percentages such as relative account balances, weighted average daily balance, and more. The allocation calculations are based on actual or budget amounts for any date range, and limits may be placed on allocations to avoid exceeding contractual indirect cost limits. Full allocation methodology can be recorded on the allocation setup and will be included on the allocation calculation report. Allocation entries are designated as a special type of journal entry in the system to simplify the audit process. Reports Standard Accounting Reports Sage 100 Fund Accounting includes a built-in report writer that allows users to generate customized financial statements and transaction analysis reports quickly and easily. The Report Setup form is virtually the same for all reports, although some forms have additional setup options. The reporting segments allow you to analyze your data at whatever level of detail is necessary. Additionally, many reports in the system contain the Drill-down Analyzer feature that allows you to easily drill down to the source entries that comprise documented balances. Full explanations of each report s purpose, column selection definitions, and options are available in the context-sensitive Help. To learn about a report, you can click the Help button on any report editing form. 12

13 General Ledger Reports To produce a general ledger report you begin on the Reports Manager navigator pane in the Accounting application. Select the Analysis Reports option and then click on the Reports tab of the Process Manager. Expand the selections for General Ledger Analysis, then expand the option for the Expanded General Ledger Report. Right-click on the <Expanded GL This Year> description and elect to edit the report. This will open the Expanded General Ledger form. Figure 6. General Ledger Setup Tab This form consists of six tabs: Setup, Content, Filter, Groups, Options, Layout, and Security. Setup: Allows you to name the report and define the reporting dates. Content: Allows you to determine the column types, sort order, totaling levels, and page breaks for the information included in the report. Filter: Allows you to exclude information from the report. Groups: Allows you to report at the Group level. (Groups are a way to summarize accounts within a segment.) 13

14 Options: Allows you to set options specific to a report. For General Ledger, the important options to note are: Include Year End Adjustments: Normally you will include Year End Adjustments. These are usually audit entries, and you would only print the report without them if you did not want to see the effect of the audit entries. Include Opening Entries in Detail: Normally you will not include Opening Entries in Detail unless you do not know what makes up an opening balance. If a user enters Beginning Balance/Opening Balance adjustment transaction types, you may need to see those entries in detail. Layout: Allows you to set the font style and size, as well as the page margins for the report. Security: Allows you to restrict other users from making changes to the report. The Print to Screen button displays the report on the screen without page formatting. You may use this to review the report output prior to printing. The Print Preview button displays the report on screen with the page breaks. You may use this to review the report output prior to printing. If the Data Import/Export module is active, the export options include a direct Export to Excel or export to any of the following file types: Comma Separated Variable HTML Document Microsoft Access Microsoft Word Microsoft Excel Print Image Word Processing Text XML Document *.CSV *.HTM *.MDB *.DOC *.XLS *.PRN *.TXT *.XML 14

15 Trial Balances To create a Trial Balance report, return to the General Ledger Analysis selections within the Process Manager. There are three different formats for a Trial Balance report: Normal, Comparative, and Working. Each of these reports can provide value to an auditor depending on the auditor s approach. The Normal Trial Balance produces current balance figures based on date and account selections. The Comparative Trial Balance adds the ability to select beginning balances in addition to current balances plus variance information. The Working Trial Balance allows you to create workspace for adjustments. If you use audit software, you will probably use the exported data from the Normal Trial Balance report to import balances into your audit software. Posted Transactions Reports A posted transaction register can be generated for any transaction date, type, user ID, and more. To get a printout of Posted Transactions, select Transaction Reports on the Report Manager navigator pane within the Accounting application. Select the Transaction Reports and then expand the Transactions Reports option within the Reports tab of the Process Manager. Further expand the Posted General Ledger Transactions and run any of the default system reports, modify an existing report, or create a custom report. FASB and GASB Reporting Sage 100 Fund Accounting can easily produce reports in the required FAS 117 and GASB 34 compliant formats. Financial statements are configured using the same report setup tools discussed previously, with the addition of new reporting options on the Options tab of the setup, as well as a financial statement format. Financial statement formats are templates the user creates that organize the general ledger accounts into the properly labeled sections of the financial statements. One option that exists in the financial statement format is the ability to designate for each section on the statement whether to display the natural account classifications or the functional account classifications. The user designates the functional account segment on the Options tab of the financial statement when creating the report. This enables users to easily generate the Statement of Financial Position showing the Net Assets section properly segregated by restriction and the Statement of Activities with the Expenditure section showing functional expenses. A special report formatting option is available to assist in preparation of the GASB 34 prescribed Government Wide Statement of Activities. 15

16 Budget to Actual Reporting and Budget Controls Sage 100 Fund Accounting can also help prevent users from over-spending their budgets. Budgets can be recorded in the system and monitored through reporting, inquiry, and established business rules to prevent users from over-spending. The following reports include the ability to compare budget to actual performance: Statement of Activities Statement of Revenues & Expenditures Statement of Revenues & Expenditures by Period With ownership of the Budget module, additional budget analysis tools and reports become available. Direct Access to the Database Tables There are various reasons to report from the database directly, including writing custom reports in third-party applications and providing an audit sampling mechanism. The system provides the complete table structure and field definitions within the Administration module from the Organization > Default Table Structure menu to assist you in locating the information you need. Refer to the Security section of this document to learn how to gain read-only access to the database tables. The Tables an Auditor Will Use Most Frequently Looking for Posted Transactions Almost everything you want to know about account transactions can be found in the following tables: tbldlsession, tbldldocument and tbldltrans. These three tables contain everything about all the posted general ledger transactions. If you have user defined fields (UDFs) set up, the following tables relate to posted documents as well: tbldldocument_udf and tbldltrans_udf. Encumbrance information is stored in the following tables: tblensession, tblendocument, tblendocument_udf, tblentrans. Budget information is stored in tblblsession, tblbldocument, tblbltrans and tblbltrans_udf. Accounts Payable Balances Confirmations Tired of typing up confirmation letters? Now you can build just one form letter, attach any client s tblapvendors table in their accounting database, and then print confirmation letters for the client s A/P vendors. 16

17 Other Assistance As a leader and advocate in the nonprofit sector, our goal is to assist and support the organizations, auditors and boards of directors to build strong, effective and accountable nonprofits that reach their goals and achieve their missions while maintaining the highest levels of integrity, transparency and accountability. For the auditors, we seek to make your audit as smooth as possible as it relates to Sage 100 Fund Accounting, while also building and strengthening standards and best practices within the organization you serve. We are prepared to answer any questions you have about our software. We hope your experience is a positive one for you and your client, and that you will recommend Sage 100 Fund Accounting to your clients. Sage Nonprofit Solutions - Customer Support If you are a Sage Accountants Network (SAN) member, you are eligible for a referral gift for formally referring new leads to Sage Nonprofit that result in solution sale within the year. Refer your leads at Register Referral - SAN Lead Register. For more information, contact our Lead Team at Firms interested in a formal software reselling relationship are invited to apply for our Business Partner program. Visit to learn more. About Sage Sage has been serving nonprofit and governmental organizations throughout North America for more than 30 years. The company helps more than 32,000 unique not-for-profit organizations increase efficiency and more easily manage their operations through the use of technology. From fund accounting, donor and fundraising management, and grant management to online donation processing, human resources (HR), payroll and fixed asset management, Sage offers a software product or service to meet the organization s need. Follow Sage Nonprofit Solutions on Twitter and Facebook read its blog and join its community for not-for-profits Sage Nonprofit Solutions Pecan Park Blvd. Suite 400 Austin, TX Sage Software, Inc. All rights reserved. Sage, the Sage logos, and the Sage product and service names mentioned herein are registered trademarks or trademarks of Sage Software, Inc., or its affiliated entities. All other trademarks are the property of their respective owners. 10/12