Department of Accounts

FOCUS

Department of Accounts Update

May 9, 2006

David A. Von Moll

State Comptroller

Department of Accounts

Agenda

Accounting and Reporting Service Area Structure Payroll Operations E-Commerce Other Systems Initiatives Internal Control Standards

Department of Accounts

Accounting and Reporting

GL ReviewCentral review of irregular balances

Petty Cash ReviewsLow turnover balancesWeak oversight

New Reconciliation PoliciesNot enough to identify and correct differences between CARS

and agency systemsMust ensure CARS is correct

Decentralization of Financial RecordsReauthorize Memorandums of Understanding (MOUs)Disbursement Reviews

Department of Accounts

Accounting and Reporting

Cost Recovery Audit$5.9 billion - annual spending subject to review – FY 2002-2004Duplicate/Erroneous CARS Payment File Review (data mining)

$257,000 – confirmed to-date by agency, vendor validation pending

$113,000 – collected to-dateStatement Letter Review (unclaimed credits)

$320,000 – confirmed to-date$40,000 – collected to-date

Contract Review (price compliance)

HE Decentralized for Accounts PayableAll data files received – some not yet scanned for duplicatesStatement letters – most pending Contract review – pending

Department of Accounts

Accounting and Reporting

Financial Statement Directive – to be issued May 15, 2006 New FY 06 GASBS

• No. 42, Accounting and Financial Reporting for Impairment of Capital Assets and for Insurance Recoveries• Determine whether impairment has occurred

• Environmental factors, technological changes, obsolescence• Decline in service utility outside normal life cycle

• Report permanently impaired assets no longer in use at lower of carrying value or fair value with footnote disclosures

• Recognize Impairment Loss net of insurance recoveries for assets permanently impaired during FY 2006

• Restate Beginning Net Assets for assets permanently impaired in prior years and not written down

• Report Insurance Recoveries for prior year asset impairments (or other recoveries) as program revenue

Department of Accounts

Accounting and Reporting

New FY 06 GASBS, continued

• No. 46, Net Assets Restricted by Enabling Legislation• Report portion of net assets that have limitations imposed

by enabling legislation as restricted net assets• Enabling legislations is clarified to mean a restriction an

external party such as citizens, public interest groups or the courts can compel the government to honor

• No. 47, Accounting for Termination Benefits• Recognize liability and expense in accrual-based

statements for:• Voluntary termination benefits when employees accept offer

and amounts can be estimated• Involuntary termination benefits when a plan of termination

has been approved by management, the plan has been communicated to employees and amounts can be estimated

New Audit Standards

Department of Accounts

Service Area Structure

Program/Subprogram/Element changing to Program/Service Area/Element for all FY 07 transactions in both CARS, FAACS and CIPPS

For CIPPS this means for the June 10-24 payroll, not before Screen and report changes Interface file layouts will not change other than to

rename the Subprogram field However, may want to test CARS interface if agency accounting

systems change

Payroll Contact – Cathy McGillcathy.mcgill@doa.virginia.gov

or see related Payroll Bulletin for more details

CARS Contact – Kim Whitekim.white@doa.virginia.gov

Department of Accounts

Payroll Operations

SSN Privacy Plan to convert CIPPS Employee ID from SSN to PMIS/BES “person

number”

PMIS/CIPPS Interface Name, address, various salary and position information

Payroll Debit Card Phased roll-out

Foreign Nationals Failure to obtain proper documentation fines - $2,500 Department of Homeland Security (DHS) increasing I-9 audits I-9 training and assistance available: martha.laster@doa.virginia.gov

ORP Retirees Imputed Life W-2 reporting

Department of Accounts

E-Commerce

Payroll Debit Card – 20 agency phased roll-out American Express to GE Mastercard conversion –

complete14,000 P-cards, 5,000 employee travel cards, 200 agency

travel cardsWeb-based trainingMonthly teleconference PA meetingsNew oversight tools

Eliminate inactive cards Ensure timely payment Monitor card usage

Rebate

Under-utilization Fee

Department of Accounts

Other Systems Initiatives

Reportline Mandatory conversions complete Remote Print conversion requests complete or scheduled

Lease Accounting System W-2s on Payline Web Site Standards

New-look DOA web site: www.doa.virginia.gov Searchable CAPP

Web Accessibility Standards

Department of Accounts

Internal Control Standards

Agencies and institutions are already required to develop and maintain a…

Sound agency internal control framework to ensure:Resources are used efficiently and effectivelyCommonwealth assets are safeguardedCompliance with laws and regulationsFinancial reporting is timely and accurate

Formal program to assess their agency control framework.

Agency heads must certify to both of these requirements each year.

Department of Accounts

Internal control initiatives are intended to…

Raise the level of internal control emphasis, resource dedication and proficiency among agencies to achieve best practices contemplated by:

Sarbanes-Oxley OMB Circular A-123 COSO/Treadway Commission

COSO – Committee of Sponsoring Organizations – Institute of Internal Auditors, AICPA, and others

Department of Accounts

Perspective

Standards – 26 pages Implementation Tools – 44 pages

Sample Code of Ethics, facilitated workshop plan, risk maps, communications strategies, monitoring activities

Evaluation Tools – 87 pagesSample self-assessment tools, control

self-assessment techniques, surveys and questionnaires for every CAPP topic

Department of Accounts

Types of Issues Raised in ARMICS Feedback

Additional resources needed Cost vs. benefits considerations Documentation clarifications needed Internal auditor independence Achievable deadlines Coordinate with related requirements of other central

agencies (VITA, DPB, APA, others) Scope and authority issues Simplify and other implementation issues Training and orientation sessions needed

Department of Accounts

What’s Next for ARMICS

Resolve scope and authority issues Work with DPB to enhance strategic

planning process – SWOT Analysis Target initial implementation to fiscal

programs

Department of Accounts

Questions?

David A. Von Moll

State Comptroller

david.vonmoll@doa.virginia.gov

804.225.2109