CALIFORNIA STATE UNIVERSITY, BAKERSFIELD, AUXILIARY FOR SPONSORED PROGRAMS ADMINISTRATION. Report to the Board of Directors

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1 CALIFORNIA STATE UNIVERSITY, BAKERSFIELD, AUXILIARY FOR SPONSORED PROGRAMS ADMINISTRATION Report to the Board of Directors October 7, 2013

2 Daniells Phillips Vaughan & Bock CPAs & Advisors Certified Public Accountants Business & Personal Consultants Member of the McGladrey Alliance Member of AICPA Division for Firms October 7, 2013 Board of Directors California State University, Bakersfield, Auxiliary for Sponsored Programs Administration 9001 Stockdale Highway Bakersfield, California Attention: Dr. Horace Mitchell, Board Chair We are pleased to present this report related to our audit of the financial statements of California State University, Bakersfield, Auxiliary for Sponsored Programs Administration for the year ended June 30, This report summarizes certain matters required by professional standards to be communicated to you in your oversight responsibility for California State University, Bakersfield, Auxiliary for Sponsored Programs Administration s financial reporting process. This report is intended solely for the information and use of the Board of Directors and management and is not intended to be and should not be used by anyone other than these specified parties. It will be our pleasure to respond to any questions you have about this report. We appreciate the opportunity to continue to be of service to California State University, Bakersfield, Auxiliary for Sponsored Programs Administration. DANIELLS PHILLIPS VAUGHAN & BOCK 300 New Stine Road Bakersfield, CA Tel Fax

3 Contents Required Communications Summary of Significant Accounting Estimates... 3 Summary of Adjusting Journal Entries Summary of Uncorrected Misstatements... 6 Exhibit A Letter Communicating Operational Matters Exhibit B - Representation Letter

4 Required Communications Generally accepted auditing standards (AU-C 260, The Auditor s Communication with Those Charged with Governance) require the auditor to promote effective two-way communication between the auditor and those charged with governance. Consistent with this requirement, the following summarizes our responsibilities regarding the financial statement audit as well as observations arising from our audit that are significant and relevant to your responsibility to oversee the financial reporting process. Area Our Responsibilities with regard to the Financial Statement Audit Overview of the Planned Scope and Timing of the Financial Statement Audit Accounting Policies and Practices Comments Our responsibilities under auditing standards generally accepted in the United States of America have been described to you in our arrangement letter dated May 17, We have issued a separate communication regarding the planned scope and timing of our audit and have discussed with you our identification of and planned audit response to significant risks of material misstatement. Preferability of Accounting Policies and Practices Under generally accepted principles, in certain circumstances, management may select among alternative accounting practices. In our view, in such circumstances, management has selected the preferable accounting practice. Adoption of, or Change in, Accounting Policies Management has the ultimate responsibility for the appropriateness of the accounting policies used by the Organization. The Organization did not adopt any significant new accounting policies nor have there been any changes in existing significant accounting policies during the current period. Significant or Unusual Transactions We did not identify any significant or unusual transactions or significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Management s Judgments and Accounting Estimates Summary information about the process used by management in formulating particularly sensitive accounting estimates and about our conclusions regarding the reasonableness of those estimates is in the attached Summary of Accounting Estimates. Page 1

5 Area Comments Audit Adjustments Uncorrected Misstatements Disagreements with Management Consultations with Other Accountants Significant Issues Discussed with Management Significant Difficulties Encountered in Performing the Audit Letter Communicating Significant Deficiencies and Material Weaknesses in Internal Control over Financial Reporting Certain Written Communications between Management and Our Firm Audit adjustments proposed by us and recorded by California State University, Bakersfield, Auxiliary for Sponsored Programs Administration are shown on the attached Adjusting Journal Entries. Uncorrected misstatements are summarized in the attached Summary of Uncorrected Misstatements. We encountered no disagreements with management over the application of significant accounting principles, the basis for management s judgments on any significant matters, the scope of the audit, or significant disclosures to be included in the financial statements. We are not aware of any consultations management had with other accountants about accounting or auditing matters. No significant issues arising from the audit were discussed with or the subject of correspondence with management. We did not encounter any significant difficulties in dealing with management during the audit. We have separately communicated the operational matters identified during our audit of the financial statements, and this communication is attached as Exhibit A. Copies of certain written communications between our firm and the management of the Organization, including the representation letter provided to us by management, are attached as Exhibit B. Page 2

6 California State University, Bakersfield, Auxiliary for Sponsored Programs Administration Summary of Significant Accounting Estimates Year Ended June 30, 2013 Accounting estimates are an integral part of the preparation of financial statements and are based upon management s current judgment. The process used by management encompasses their knowledge and experience about past and current events and certain assumptions about future events. There are no significant accounting estimates reflected in the Organization s June 30, 2013, financial statements. Page 3

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9 California State University, Bakersfield, Auxiliary for Sponsored Programs Administration Summary of Uncorrected Misstatements Year Ended June 30, 2013 During the course of our audit, we accumulated uncorrected misstatements that were determined by management to be immaterial, both individually and in the aggregate, to the statements of net position, results of operations, and cash flows and to the related financial statement disclosures. Following is a summary of those differences. Effect Increase (Decrease) Description Assets Liabilities Net Assets Revenue Expenses Carryover Impact from Previous Years Current Year Misstatements Known Errors $ - $ - $ 32,536 $ - $ 32,536 Reverse the accrued audit and tax fees for FYE as the all events test has not - (27,400) - - (27,400) been met Total Effect $ - $ (27,400) $ 32,536 $ - $ 5,136 Page 6

10 Exhibit A Letter Communicating Operational Matters

11 Daniells Phillips Vaughan & Bock CPAs & Advisors Certified Public Accountants Business & Personal Consultants Member of the McGladrey Alliance Member of AICPA Division for Firms NANCY C. BELTON To Management and Board of Directors California State University, Bakersfield, Auxiliary for Sponsored Programs Administration Bakersfield, California In planning and performing our audit of the financial statements of California State University, Bakersfield, Auxiliary for Sponsored Programs Administration (the Auxiliary ) as of and for the year ended June 30, 2013, in accordance with auditing standards generally accepted in the United States of America, we considered the Auxiliary s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the Auxiliary s internal control. Accordingly, we do not express an opinion on the effectiveness of the Auxiliary s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity s financial statements will not be prevented, or detected and corrected, on a timely basis. Our consideration of internal control was for the limited purpose described in the first paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Our audit was also not designed to identify deficiencies in internal control that might be significant deficiencies. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. We communicated the significant deficiencies identified during our audit in a separate communication dated October 7, Additionally, this letter includes a comment and suggestion with respect to a matter that came to our attention in connection with our audit of the financial statements of California State University, Bakersfield, Auxiliary for Sponsored Programs Administration for the year ended June 30, This item is offered as a constructive suggestion to be considered as part of the ongoing process of modifying and improving the Auxiliary's practices and procedures. Page New Stine Road Bakersfield, CA Tel Fax

12 Procurement The procurement department did not maintain the rational to limit competition for two of the seven items selected. For those two items the rational to limit competition was obtained from the Principal Investigator. Procurement should follow their current policy to retain this documentation to ensure complete documentation regarding the purchase of assets with federal money. This communication is intended solely for the information and use of management, Board of Directors, others within the organization, and federal awarding agencies and is not intended to be, and should not be, used by anyone other than these specified parties. DANIELLS PHILLIPS VAUGHAN & BOCK October 7, 2013 Page 8

13 Exhibit B Representation Letter

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