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so on the sfp audit program the way this formerly used to work for sfp audits is if you had an sfp a project and you would need your project audited at the completion that was done by the office of public school construction in the past they were the ones who actually did the audit but with the california education code section 41024 there were some changes made a few years back and what happened with that is that that responsibility now got moved over to local cpa firms so basically as a school district your responsibility is to contract with the firm that much as they do your annual financial audits they will now be auditing your sfp projects and so uh a cpa firm will do that for you and they will use the audit requirements that are currently posted in the k-12 audit guide and that's appendix b for the sfp program and that can be found on the education audit appeals panel website so if you go into there it will have the for the sap program and also have appendix c for our program fdk we'll have a little bit more of a mention of that um later in our presentation um we're going to focus on this presentation on on the sap audits but in appendix b appendix b is uh an audit guide that was developed with the uh opsc the california department of education uh seo and uh working with with the school districts it works also with um the um we we have uh just that that group that works together to put together the cpa firms we put together the audit guide and that has the procedures uh for the the program for sfp all projects funded on or after april 1 2017 and apportioned on or after july 1 2017 they're subject to this performance audit also subject to the performance audit is what's called the unfunded list and this is these were projects that were added to this list between may and october of 2012 and they received sab approval for placement on this list in june of 2017. they were not subject to a grant agreement and we'll talk more about a grant agreement a little later but um they still do need to have a performance audit i think there were approximately around 100 of those projects and the sfp audit report will be due one year from the final submission of the final form sab 5006 expenditure report so that your final expense expenditure report that you will submit to opsc and one year after that report comes to opsc it's expected that an audit report done by cpa firm would be submitted to the state controller's office for their review the yellow book standards for performance audits tied to the generally accepted government audit standards would be used tied to this review along with the k-12 audit guide okay so let's talk a little bit about the types of audits that you would have there's basically going to be three types of audits that you can have on an sfp project one would be a reduction a cost incurred audit what that means is that an audit didn't go to full completion so basically um a project was stopped it was stopped because the district stopped the project or it did not meet substantial progress requirements that are necessary with the office of public school construction but essentially it's a project that still incurred costs but it only went up to a certain point didn't get completed however there's still cost incurred with that uh review and those would be needed to be audited by cpa firm your basic type of audit would be what we call a basic uh closeout audit and that's when an audit goes from the beginning to the end it's completed and you turn in your final submission report and um that will be audited in full by cpa firm the other type of audit is actually an audit it's a use of savings audit and um what that is is if you have savings at on an audit at um on a project you've completed the project but their savings meaning not all the dollars on that project were spent but they can they're savings that could still be used on other high priority project assets and we'll we'll talk a little bit about that also um later a cpa firm would be auditing that use of savings that could be incurred and that would be the third type of audit that would be done so there's three different types of audits that can be done that you would need to have done by a cpa firm we talked a little bit about you do your audit and there's an audit report that a cpa firm would do for you much like they do for the full financial audit and that goes through a process where it is turned into the state controller's office and they will review and approve that audit report making sure that it followed the k-12 audit guide and the audit standards if there's audit findings on uh on an audit and a district wanted to appeal those findings they would work with the education audit appeals panel eep and with that process if you have funds due to the state in an audit you can have funds due to the state tied to ineligible expenditures that might have been found in the audit cpa firm would set up a finding on that and might have some expenditures that weren't appropriate for the program formerly the department of education was involved in that process and the return of those funds to the state now it's opsc there can also be grant adjustments for uh site grant adjustments that can come about from an audit um that would you would work with opsc on that and opsc is the organization that basically when it comes to tracking savings unused funds uh those type of areas for the future even after an audit opsc will be the organization you would work with on that and we'll have some information for you later in the review on even some specific people even in our office that you can work with in on any of these areas if you have questions or have these kind of situations occur we like to know the whole process in this way in a kind of in this flowchart i think it's really helpful to be able to take it kind of from start to finish so as we mentioned a district would have its final 5006 expenditure report it's completed a project it's going to send that in still to the office of public school construction as it has always been and formerly as we mentioned opsc would do the audit but now it's going to be a local cpa firm so opsc upon receiving that final expenditure report we will notify a district that an audit needs to be done within the one year and then it'll be the district's responsibility at that point to get a contract with the local cpa firm to have that audit performed using the k12 audit guide and following the government audit standards the local auditor upon their completion of their audit report will submit that that to the state controller's office who is responsible for review and certifying that audit report and as we mentioned the district will have 60 days to file an appeal with eep if they have any issues with any of the findings that a cpa firm found cp seo will provide opsc a copy of the audit report also because we will need that not only for our information related to our own closeout of a project but it's also worthy organization related to um collection of funds for any audit findings for ineligible expenditures granted adjustments and any type of accounts receivables that would be set up with the district related to any of these findings or grant adjustments would happen through the state allocation board now this is a area i think that is a part of our presentation that's really something to really take note of related to resources that are available to you on our website that can be really helpful to you in the audit process we have a the website there and it's called the k-12 audit resources which we're about to show you some screen shots and other things related to that but basically some of the the tools that are on here to help you with your audit whether you're a school district or cpa firm it's uh we have some various tools that here that are available to you that will be helpful to you in the process one of the first things that's on there that you'll you'll be able to see are what we call refreshable reports and what these refreshable reports uh will have is basically the inventory of the the different district s p projects that would need to be audited so we we keep that going constantly updating that on projects that are coming up for audit or that will need the audit done in that one year period for the three different types of audits that we described earlier in our presentation the reduction of costs incurred a basic closeout audit and a savings audit so that's one of the things that you'll see on there and we'll we'll get into some of the other tools you can use here's a screenshot of the k-12 audit resource page so you can see this is if you're on the dgs office of public school construction page when you're specifically in opsc's if you look at the the bottom of this screenshot you'll see where it says k12 audit resource and um if you go into that and and link into that we'll start to talk a little bit more about that um here is um this it'll bring you to this area so um first of all you'll see some contact information up there and we have jason's name on there and jason with his uh phone number and email jason is our our main contact he's the the manager over this k-12 area so has his contact information also uh sue reese's contact info she's our manager in the fiscal area so there's some contact information for you there um also um you can see that where it has the k12 workload reports those are the the reports that we just mentioned as the refreshables you'll be able to pop into those and see the inventory of different audits also we have some templates on there both reporting templates for a district and we also have some schedules that a cpa would use for their audit and we'll talk a little bit more about some of those things and um also wanted to get a show give note to the k-12 audit workshop uh it there's a area to to link into there we're gonna what we have on there now is um actually some of our past presentations we've done which are even a lot more detailed than what we're gonna have time to do today but you can see some past presentations we're actually putting on some new presentation tapings that we're doing on there for you that will break down this audit process even further so those are going to be available for you in the future that you could use also we have a k-12 question and answer sheet on there frequently asked questions that would be available to you also where you can go into that and see many of maybe even some of the questions you would have today we would have questions and answers related to that so that's posted on there there's a lot of tools there available for you for the audit here's an example of one of the refreshable reports that we mentioned so it has a kind of a description of some of the projects that uh would be needed uh that need to be audited so you would be able to go for those three different types of audits that we described you could pop into the links related to the referral even for your own district if you have projects that are going to need to be set up for audit and and for the different types of projects so that's available for you and there's an example of a refreshable report documents needed for your audit this is there's opsc has what we call a suitcase of documents that that are kind of the starting point for your audit so if you have a project that is coming up for an audit um a cpa firm this is they would actually go to opsc and request these type of documents that um to begin their audit so it would include various correspondence and letters from opsc would be [Music] part of this suitcase escrow statements appraisals the the grant agreement sab forms that are involved here especially your 5006 expenditure report and your detailed listing of project expenditures these are some of the documents opsc will have for you upon your request and that would be what a cpa would would basically start with in their audit and then they would start their their work with the district working with some of the source documentations and records reporting schedules that would be required for a school district for an lea these are some of the reports that need to be done tied to this whole audit process there's a determination of savings unspent funds and use of savings reports these all of these templates of these schedules are contained on that k-12 audit resource page but these are reporting schedules that would need to be completed by the lea as they go through the audit process and these are some of the things that a cpa would be looking at in that process now we're going to go ahead as we mentioned and and get into a sample audit and we're going to go through some of the steps that are part of the k-12 audit guide and and kind of go through some of them uh give you just kind of an overview at least of what some of those steps are we're not going to be able to go into a great amount of detail with the amount of time we have in this presentation but we will give you uh an overview of some of those and we will have as we said there's other training sessions that we're going to post on our website that will get into these areas even deeper the first area i wanted to talk about is it's the preliminary audit procedures so for a cpa firm the first thing they're going to do is to just see what kind of records a district maintained making sure their general ledger is at a project specific level all projects need to be accounted for separately that the california school accounting manual type requirements are used get into district matching fund issues making sure that funds were deposited in the county school facility fund expended prior to the notice of completion this is a more recent issue where it's uh we have written into the guide now that non-compliance with matching fund requirements may result in a potential loss of funding as determined by the state allocation board so that is a a more recent issue that has come up that was added to the audit guide that that may result in a potential loss of funding if this is uh there's not compliance in this area general expenditure testing these are some of the main areas that to be aware of that a cpa firm would come in and agree to trace expenditures to supporting documentation so you're always going to want to make sure that you have good supporting documentation for all your expenditures any prorations of expenditures have a documented method for those prorations expenditures eligible per laws and regulations including the ed code and sop regulations and then the grant agreement which we'll talk a little bit more here after this slide timing of expenditures within the eligible three-year time frame for an elementary school and a four-year time frame for middle or high school that it's done in those applicable time frames we mentioned the grant agreement every unless it's an unfunded project um so that's going to be the the very small amount of projects there but pretty much all the projects now are going to have a grant agreement with uh basically this the state related to ops csab and the district and the grant agreement will contain basically the conditions related to the funding so one thing we want to make sure that you're aware of is that in the grant agreement in section g it'll give you some guidance related to eligible expenditures and then we'll show you in now on our next slide so section g will show you a lot of the eligible expenditures section h ineligible expenditures gives you some examples of those um we want to really make sure that you know you're aware of things for sure like in this section here we have some items i draw your attention to where it says little g and it had items that are not um uh not considered furniture and equipment they're considered operational supplies in nature making sure that things like your computer equipment and some of that athletic team type equipment you know golf carts trailers we've listed some specific things that have been potential issues in the past that have actually that you're aware of those specifically so um basically that is the um my part of the presentation now i'm going to turn it over to um our one of our fiscal audit supervisors who's been instrumental part of this program from the beginning jason hernandez and he will be one of your main contact people even in the future related to questions so i'm going to turn it over to jason and jason will uh take you through the rest of the presentation all right good morning thank you keith again my name is jason hernandez and i'm one of the audit supervisors uh in charge of the k-12 team like he mentioned and keith and i uh were the ones that worked with the with the audit group with the the cpas to deform the original um procedures in the k12 audit guide appendix b and then later on appendix c and so we'll continue on with the sample audit that we started you hear here on the screen you'll see the planning and construction cost the planning cost for the architect and for the design professionals we look at their contracts the construction contracts the contracts for this for the construction managers and the basic procedures asked the cpas to agree and trace those source documents to the amounts that are reported on the delope uh not to exceed the final billing um one of the main things is if it's the opposite that's the main thing that we're looking for that it does not exceed that final billing if it's the opposite then um if the if the main contract exceeds the amounts reported on the expenditure report that's not as crucial because in that case it could be a contract that is prorated over multiple projects and so we'll just look at the amount that is applicable to the particular project that you're auditing and then also depending on the on the delivery method that was used we look at the public contract code um we want to look at documents we substantiate the competitive bidding um requirement if that was required for like your traditional design bid bill delivery method if they're using another method such as lease lease back then there's other requirements with those and not necessarily the competitive bidding process okay next is the 60 commensurate test and this is basically a test to compare the hard construction on costs on the project versus the soft cost of of the project when um the lea originally submits the project for funding they submit an estimate of their costs and that at least six percent of those costs on the sm has to be for hard construction costs at closeout when the audit is being done they're looking to see what the actual percentage was for the project and one thing to keep in mind is this is audit procedure that does not result in a finding this is um mainly for informational purposes the table that you see on the screen there that will be one of the tables that is listed at the end of the audit report and that is one of the things the state controller's office will look to make sure this table is included but again this is just for informational purposes this is not a procedure that will result in an audit finding so you'll prepare the the table um to make sure in the example here we have uh sixty percent of the total grant was the six million dollars based on the hard costs that were reported by the district on the expenditure report they had 6.5 million or 65 percent once the audit was done the cpa determined that the actual amount was 6.4 million or 64 and then they'll just show the difference and that way that will be one of the tables that is shown at the end of the audit report okay enter fund transfers um in this audit procedure we're reviewing the supporting documentation for transfers out of s p funds out of fund 35 um determine if they're allowable and mainly because a lot of these projects that we're looking at right now are reimbursable projects where the district already received their funding ahead of time and the project was complete so when they receive these reimbursable funds they are initially deposited into fund 35 and from there they are free to move them either to the original funding source such as fund 21 if they use bond funds fund 25 if they use developer fees um or if they do not need that they're also allowed to use use the funds to to pay down any um debt instrument that was used to move these projects forward for the interest income we're looking to agree and and trace the reported interest that's reported on the expenditure report on the sab 5006 and trace and agree those amounts to the general ledger and any other supporting documentation the district may have and depending on if that interest the audited interest amount um is different than that was the reported amount on the expenditure report that may affect the audited amount of savings later on and you'll see that on one of the later slides okay and this has been a topic of a lot of discussion lately we've got a lot of questions the restricted maintenance account there's three requirements that the district has to do they have to establish an rma account they have to deposit the minimum amount required into the account and that can change depending on on which year district received funding but commencing in the fiscal year 2019-20 a minimum of three percent of total general fund expenditures um for the most recent fiscal year and prior fiscal years after the receipt of funds including the year that it received the funds basically starting with the year the district received the funds they have to make those deposits there are exceptions for the small schools you see those up there under ed code section 170 70.75 there's an exception based on ada for the high school districts for the elementary districts and for the unified and it's the various peoples depending on what type of district it is and that small school exception does not mean they do not have to charge the fees what it means for example if it was a 1920 fiscal year they do not automatically have to charge the three percent if they can meet that requirement with a lower percentage then they can do it if they're only charging 1.5 percent and it's an elementary school with only 800 pupils they meet the exception rule so they can they meet the requirement by only charging the 1.5 so that's what the exception means that they can meet their requirement with a lower percentage but they still have to be depositing those amounts it just means they do not have to deposit the maximum amount of the three percent they also have to have their ongoing uh major maintenance plan and one thing we've had questions about that is there a template that they have to use for this major maintenance plan there is no template what we're checking for is to make sure that they do have a plan um uh how that is presented is there is no right or wrong way we're just making sure that it's documented that they do have a major maintenance plan if some of this is not done then potentially it can be a material in accuracy and um and that could be an item that's taken to a future board okay so we want to prepare a table because um not every year the amount of deposited would have to be three percent um depending on when the project received its funding um there was various amounts that the district could have been charging to still meet that requirement it was starting with the fiscal year 1920 that it was three percent but for example if the project received its funding in 2017-18 then there's a test it's the greater of the lesser of three percent of the general fund expenditures um or the amount that was deposited into the account in the 2014 fiscal year or two percent of the total general fund expenditures so it's the greater of either of those amounts as long as they meet that requirement then they're meeting their their percentage so it's not automatically three percent a lot of it depends on which year they're deposited uh which year they receive their funding okay so we want to have a sample question so when auditing and validating um the lea's restricted maintenance account and the required deposits how many fiscal years of deposits should be validated and i briefly mentioned that on the previous slide but commencing with that fiscal year uh 2019-20 that cpa should be validating that that the lea has deposited into account a minimum of three percent um and that that minimum three percent starts with the fiscal year in which they receive the funds and every subsequent year up to the most recent complete fiscal year so potentially could be more than one year or again also depending on when they receive the funds it could be only one fiscal year so it's just important to keep in mind that it's not automatically going to be just the most recent year we're validating from starting with the fiscal year when the district received their funds so we have two examples on here one is for a non-reimbursable project in this case the la receive their funds on july 12 2019 and the final expenditure report was submitted on july 12 2022. the audit was completed on january 12th of 2023 so the cpa would verify the pods were made starting with that fiscal year in which the district received their funds in this case that would be the 1920 fiscal year they would also validate the 2021 and the 21 22 fiscal year since um the 22-23 fiscal year was not complete um they did not need to audit that one it's just the most recent fiscal year that is complete um another example here is for a recent reimbursable project lea had a reimbursement project they received their funds in july 12th of 2019 the final expense report was submitted a few months later on december 12th of 2019 and then a year almost a year later the audit was completed in november 19th of 2020. in this case the cpa would verify the deposits were made starting again with the fiscal year in which the funds were received by the district so in this case they would only have to verify the fiscal year 1920 um based on when those funds were received and when the audit um was started by the cpa so it can be one year or it could be multiple years just depending on when the funds were received by the district and when the audit was commenced okay next we'll go into um adjustable site grants these are the four site grants for site purchase site relocation hazardous waste removal and the department of toxic substance control and these are the only four grants that are adjustable that we basically they are adjusted to the final eligible amount so the grant can be adjusted up if there's additional eligible expenditures or it can be adjusted down depending on how what the audit results but these are the four categories that can be adjusted okay starting with this site purchase grant we're going to agree and trace those amounts reported to the source documents the site purchase funding is proved based on the lesser of the actual cost versus the appraised value of the site so we need to determine what the actual costs are those actual costs are determined based on the final escrow documents or any court orders that were issued a certain cost it's important to remember that certain costs listed in the court order are not necessarily eligible for site purchase funding and when we say that one thing's important and i'll repeat it as we go on it doesn't necessarily mean that it's an ineligible expenditure it just means that it's not eligible for additional funding under the site purchase grant so that's important because i know that everyone's concerned that any ineligible expenditures have to be returned to the state but if it's listed on there and just because it is not eligible for additional funds for the site purchase does not mean that it is an ineligible sfp expenditure um one thing we want to we want to make sure that we're looking at the final judgment versus the preliminary judgment when we're looking for the amounts and any expenditures listed and we want to make sure we have a court order versus a settlement agreement so you'll see the table below here's a sample that we have and and these this table will be used um to fill in the information on one of the schedules that is reported in the audit report so in this case you have a site grant for 750 000 there was a reported amount of site purchase for a million dollars the audited amount determined that it was 750 which is that difference of 250 000 therefore there was no grant adjustment in row e and then the final grant amount as determined by audit was the 750 000 listed in row f um you also want to make sure as part of the audit procedures that you're verifying the acres purchased and we look at the cde final site approval to see the acres in this case and you'll see the acreage table that comes from that cd final approval letter in this case there was um 20 acres purchased the final acres approved were 15 and there's a difference of five so there has to be an adjustment for the site the majority of time that adjustment is done when the project is approved for funding at the grant approval there may be cases though where that the acres adjustment has to be made after the audit so i have two sample tables here the one on the left is when it was done ahead of time so again it's the same table that we saw on the previous slide that's why you see a site purchase grant of 750 000 because they already made the adjustment down to the 15 acres versus the million dollars that was um reported based on the 20 acres that were purchased for the project and the final ground amount again was 750 000. on the on the right you see where the adjustment was not made ahead of time so therefore site grant that was approved by the sab was the million dollars matching the reported amount um the audit amount based on the 15 acres and the adjustment down with 750 000 therefore they'll have to be a grant adjustment of 250 000 to get down to that final audited grant amount of and 750 thousand okay the next adjustable grant is the site relocation and we'll kind of go through the same procedures as the site purchase in this case what are some of the typical site relocation costs included that's some of the questions that keith and i will get from time to time some of those include the moving expenses or re-establishment expenses um costs for replacement housing last resort housing temporary housing and for businesses there's loss of goodwill and the note we have there's just remember these costs are for moving the public um and it's not for district facilities and we will agree and trace these sample amounts to the supporting documentation and the eligibility or the criteria for this particular audit uh procedure is per title 25 of the ccr section 6000. and uh one thing you too you'll have the grant agreement as a as a backup keith had mentioned some of those eligible expenditures earlier that's listed in table h and the ineligible expenditures it's listed in table g but there's also cost allowances that are listed in the ccr under sex section 6000 so this is another one they may have some replacement housing costs that exceed the allowance those costs are not ineligible but they are just not eligible for an additional site relocation grant so that's you know i'll repeat that a couple times but that's import important distinction to know that they're just not eligible for the site relocation grant increase but that does not mean they are ineligible they could be eligible costs just not eligible because there's a maximum cost allowance associated with certain categories so in this example we had a grant amount of 515 000 they reported 530. the audit amount was 500 000. so there would have to be a grant adjustment down of 15 000 to lower that grant down from the 515 that was initially approved down to the audit amount of 500 000 and then you see the final amount um they are listed of the 500 000. um hazardous waste um this is this is uh the next adjustable site grant category um again we agree and trace the sampled costs of the source documents you see on the screen there some of the the type of costs that we look at from the supplemental site investigation feasibility studies any remedial action any response action completion is just listing some of the typical costs that we'll see under hazardous waste um one thing too that we want to make sure is the final hazardous waste it's approved cannot exceed the 150 and what does that mean you'll see there the note for the regulation per 1859.74 dot 2d the final grant amount listed in the table cannot exceed 150 percent of the appraised value of the site so we'll the auditor will fill out this table they'll have the final eligible grant amount based on the site purchase from the earlier site uh slide of 750 000 multiplied by the 150 percent to give you that maximum threshold of 1.125 million and they'll take that amount and they'll move that over that you see in row g in this table where it lists the maximum eligible amount so again we'll look at the eligibility expenditures all the work must be required by the department of toxic substance control in order to be eligible the dtsc may clear a site but mandate that continual monitoring as condition of approval um but one thing to remember is this continual monitoring is not eligible cost for the for this hazardous waste grant again we're not necessarily these costs are ineligible for sfp costs they are just not eligible for hazardous waste grant increase any cost after the date of this of the letter approving the the site as all clear any of those costs after we get that letter from dtsc are not also eligible either some costs you may see in this category we've seen from time to time are miscategorized and not eligible for the hazardous waste grant such as the preliminary environmental assessment and that phase one site assessment which should be listed under the the dtsc fees um so be may just be a matter of recategories rising those expenses as they were listed so prepare the table it's a similar table for each grant you have the the amount reported the audited amount the difference any grant adjustments and then the final maximum eligible amount you see there in row h okay the final adjustable grant is that department of toxic substance control fees the dtsc environmental review is required by state law this process ensures again that the new school sites are uncontaminated or the property was previously contaminated that they have been cleaned up to a safe level in order for students to attend the school the type of fees we see again is a phase one environmental assessment fees your preliminary environmental site assessment fees any response auction cost paid to dtsc and then finally when the site has been cleared any fees associated with the final review and a determination of no further action again once you've agreed and trace the sample cost and determine the eligibility of the expenditures then you'll prepare the same table again with the amount the grant amount the amount reported any difference if there had to be any grant adjustments up or down and then your final a grant amount listed there the final audited grant amount okay now those four schedules again i mentioned earlier they feed to this summary table and this is a summary of the site grant adjustments and you'll see each one of them listed there the site purchase the site relocation the site hazardous waste removal and the department of toxic substance control so you and it lists the grant amounts the same information the reported expenditures and the audited difference and the grant adjustments in the examples we had a grant adjustment reducing the site relocation and the site hazardous waste down to the 500 000 and the 600 000 respectively but we have many cases too where where there's a grant increase and you'll see the increase for the site as its waste removal or if there's an increase for site relocation it would also be listed in this table as well and opsc once they receive the certified audit report from the state controller's office we look at this table to determine what what items we need to take to the board to for any site grant increases or any site grant decreases okay the date of occupancy this was something that should have been verified by opsc at the substantial progress review what the cpa is doing is just verifying that the opc already did that the date of occupancy should be after the submittal of the application for funding so after the district submits their sab 5004 what are some of the documents that we look at when determining that date of occupancy um we look at school board minutes a letter from the fire marshal any news story we may see online indicating when the when the date the school open or perhaps the notice completion it's not limited to these four items but these are just the four items that we look at most of the time there is that potential but if we can't um if we determined that they [Music] did not do this that the project may have to be rescinded okay the determination of project savings um at the beginning of the audit and one of the documents it was one of the schedules that keith had listed on a previous slide but the lea submits the schedule of sfp determination of project savings and in there it's basically listing um based on what expenses they reported uh what the reported amount of the savings is what the cpa will do in the audit procedure is they are recalculating that savings um minusing away any site-related grants any site-related expenditures and making sure those are excluded from the calculation to determine what the audited savings amount would be savings for non-financial hardship projects new construction and modernization can be used for high priority capital outlay so this is the type of keith had mentioned earlier the use of savings reports that are submitted and later on there's that use of savings audit these are savings from the non-financial hardship projects for new construction and modernization any audited savings is displayed there's a schedule of sap determine of project savings and the audit savings amount will be used by the opsc for tracking purposes um here you see a copy of that schedule so you have the reported amount in the first column the audited amount in the second column and then any difference in this particular example i won't go but line by line but if you look at the interest amount in row e the district had reported 20 000 in interest the audited amount when they did the audit procedure was determined to be 30 000 so there was that difference of 10 000. so that in essence affected the amount that was financed for the project in row f and that changed the final amount of savings from the reported amount of 520 000 to the audited amount of 530 000 and then you show the difference in that last column schedules that are included in the audit report i had previously mentioned that 60 commensurate table for information purposes the schedule we just looked at that site grant adjustment summary and also the one we talked about the determination of project savings in addition we will have the summary of audit findings this is the schedule that lists all the audit findings that were found in the audit and then finally the summary of final project funding and that lists any amounts that are due to the state or any amounts that are due to the district for any site grant increases so here that you see on this slide is a sample of the schedule the summary of audit findings so it's going to list the section of the audit procedure the number of the audit procedure what was the objective of the particular procedure the findings and outcome and if the amount was the site amount it was related to site or if it was related to any other ineligible expenditure so for example on here we had two and you can have audit findings that are non-monetary and then ones where funds are either due to state so in this case we had one for relocation costs earlier we had to make the adjustment the costs were not eligible for state reimbursement they exceeded the maximum allowance for that title 25 of the ccr section 6000. um so uh that site grant adjustment the grant had to be reduced down um any hazardous waste again it's showing the amounts that had to be reduced down to 50 000 for that total of 65 000 and then the example we had um ineligible expenditures of 105 000. so whatever that the findings happen to be this is the summary schedule that's used and this is the one that will be included in the final audit report okay and then the final schedule that sched the summary of final project funding this one lists all the basic project financing the reported expenditures and basically the amount or the of the audited savings or any overspent amount that was determined if there was any eligible expenditures it'll list it there if there was a financial hardship grant adjustment based on the funds being returned to the state for any savings because there's no savings on the financial hardship project it would show the amount coming back in that row again any site grant adjustments whether it is amounts that are coming back to the state or grant amounts that are increased to the lea or to the district it will show it there and give you a grand total of amount to be returned to the state or um for non-financial hardship projects and if it's a financial hardship project the amounts that are returned to the state for a financial hardship project okay so um questions that we keith and i get often and anyone in the k-12 team that we work through some of the common problem areas um under the site expenditures uh expenditure we see in expenditures or questions about expenditures after a site is cleared often too we see costs that are miscategorized where something may be listed in hazardous waste but it really should be a dts c fee or perhaps um one of the costs that are paid for under site other um we see um the expense reports the the deal the detailed listing of project expenditures where there's no description on the expenditure report or it's a real general um expenditure just really it says something simple like construction and it does not describe the type of work and often um we need some type of description in order to determine the eligibility um keith had touched on it briefly but expenditures outside three or four year windows so they could be eligible expenditures but if they're outside the three year window for an elementary school or the four year window for a middle school or a high school then those costs are are not eligible um interest costs from a local bond charge to the project that's not an eligible cost any loan initia initiation fees uh costs from a cpa or from a cpa from a from a cop from a certificate of participation that has charged the project those are not eligible for sfp funding some of the issues that we've come across in this past year there's been that question auto reports are late or not being done again the audit report is due one year from the final um submission of the 5006. uh we know this year has been a little bit different than most year because of covet if the cpa needs to request any time extension from that year then you will contact the state controller's office and work with them for any time extension to submit that report a question that came up more recently is the proper audit guide use so the question being like if the cpa starts an audit in one fiscal year and completes it in the subsequent fiscal year which audit guy do we have to audit to so in this example here we have that the the cpa began the audit in may of 2020 the 1920 fiscal year but did not complete their audit until august of 2020 the in the new fiscal year being the 2021. and the question came up well do we have to do um the audit procedures to that new audit to the fiscal year 2021 and the answer that is no whatever fiscal year and whatever audit guide the cpa started the audit that's the audit guy that you audit to and all your audit procedures will be done to that if there was any updates or revisions done to the new audit guide in this case the example of the 2021 audit guide those updates will not apply to the audit it all begins it all depends on when what fiscal year the cpa began the audit the restricted maintenance account deposits they must be reviewed for the most recent fiscal year again and prior fiscal years after receipt of funds including the fiscal year the district received its funds so that's just a reminder that it could be multiple years that you're verifying and not just the most recent fiscal year so it's starting with the fiscal year the district received the funds up to the most recent complete fiscal year if you have if you cross over again to another fiscal year that's not complete then you do not have to get the records and verify for that year it's just the most recent year that is complete okay audits done for the following projects so other type of audits keith had touched on the three types we just went through um the most common one the full closeout audit but there's also the rci which is the reduction of costs incurred and the savings audit so for rcis these are projects with failed substantial progress they could have either failed substantial progress or more commonly the lea requested their projects be reduced to costs incurred in the past we usually get a letter from the lea stating the reasons why they did not want to move forward with the project and so therefore that starts the process for the reduction of cost incurred audit in this case once we receive that letter from the lea or if they fail the 18-month substantial progress the project will get put on the workload and those are the professional reports that keith had mentioned earlier and those will get on the list so an audit will be done to um audit the expenditures that were made to date on that particular project it's important to remember that there is no savings um associated with the reduction of costs incurred audit all funds that are not eligible for sfp expenditures are considered unspent funds that are returned to the state a savings audit is only conducted for savings usage that's reported to the state for non-financial hardship projects new construction and modernization a total project savings again is determined when the closeout audit is completed the schedule and the district had submitted their schedule of determination of project savings and then there was the audited um savings amount uh subsequent to the closeout audit the lease are required again to report the use of savings annually on this the schedule of sap use of savings summary until all the savings is exhausted so um commonly we receive these use of savings reports after the final closeout audit sometimes we see them um at the same time especially since a lot of these projects are reimbursable projects but those one thing to keep in mind we've had that question too is the savings audit in the closeout audit if you re submit both the final expense report and your use of savings report at the same time can it be one audit there needs to be a separate audit for each one of those there'll be one audit report for the closeout audit and there'll be one audit report for the use of savings and again the use of savings shall be audited when reported until all the savings plus interest has been expended so there potentially could be more than one use of savings on it if the district had 500 000 in savings and they reported 250 one year and subsequently they reported the balance the next fiscal year then there would be two separate audits done for each one of those reported use of savings okay finance um additional types of projects you'll have are the financial hot projects the queer tech the charter school the unfunded listed projects that keith had touched on earlier and the fdk or the full day kindergarten projects okay some of the other agencies if you had questions um such as if you wanted to require uh require if you wanted to ask for an extension to submit that final audit report that's due within the one year you would contact the state controller's office there's the contact information for the manager in charge of the audit unit that deals with the with the audit reports um if you had to deal with eep and the district was going to file appeal to the education audit appeals panel the contact person you see their executive officer and their contact information there and then if there's any questions about payback for any and eligible expenditures then the accounting manager's information is listed there as well okay and then some of the contact information who can we contact opsc for any of your questions um my contact information is listed there suzanne reese which is the operations manager for fiscal services and one of the other audit supervisors hung bang and you can contact any of us for any questions or you can email any of us and we can research any questions and answer anything that may come up okay that completes the presentation portion of the question i will turn off the screen share and then we can proceed to answer any questions