County Audit Guide - Desk Review Checklist - GAAP Version

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STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page i August 2006 COUNTY REPORT REVIEWED REPORT 9S FISCAL YEAR END DATE REPORT RECEIVED AUDITOR (CPA FIRM) AUDITOR 9S ADDRESS NOTES: CONCLUSION: REPORT ACCEPTED? Yes No ADDITIONAL INFORMATION NEEDED? Yes No REVIEWER SUPERVISOR DATE DATE STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page ii August 2006 PURPOSE, DESCRIPTION, REFERENCES TO STANDARDS This checklist should be used to review reports for the fiscal year ended December 31, 2005.

PURPOSE : The purpose of a desk review of audit reports is to determine instances of noncompliance in the financial statements and the auditor 9s reports with applicable auditing, accounting, and financial reporting standards and related requirements. The purpose of this checklist is to help assure that the scope of the desk review is sufficient to fulfill that objective and to ensure consistency of the review process. DESCRIPTION : This checklist is organized in the same order as the elements of the audit report.

It is intended to be a guide for the desk review and is designed to be a self-contained document. All questions in the checklist are designed to receive a ... more. less.

cyes, d cno, d or cN/A d (not applicable) response during the review process. The answers cyes d and cN/A d are considered favorable responses and require no further action on the part of the reviewer. All cno d responses are unfavorable and must be explained either under the question or in the comment section at the bottom of the page. In some cases the reviewer will find it necessary to make notes regarding further research required during the working paper review that will follow the desk review, regarding a specific question. Notes made during the review process will be used later to assist in composing a letter to the IPA regarding any deficiencies found. REFERENCES TO STANDARDS : AC Accounting Standards Current Text, FASB AU Codification of Statements on Auditing Standards, AICPA AAG-SLV Audits of State and Local Governments (GASB 34 Edition), Issued September 30, 2002, AICPA GASB Cod. Sec. Codification of Governmental Accounting and Financial Reporting Standards as of June 30, 2005, GASB G-2005 Governmental Accounting, Auditing, and Financial Reporting, 2005, GFOA GAO Comptroller General of the United States Government Auditing Standards, 2003 Revision OMB A-133 Office of Management and Budget (0MB) Circular A-133, Audits of State, Local Governments and Non-Profit Organizations, Revised June 24, 1997 GASCA133 AICPA Audit Guide, Government Auditing Standards and Circular A-133 Audit, With Conforming Changes as of May 1, 2005 OSA-CAG Office of the State Auditor 9s Audit Guide for Financial and Compliance Audits of Minnesota Counties COFARS Minnesota Counties Financial Accounting & Reporting Standards, issued by the Office of the State Auditor C-Q&A GASB Comprehensive Implementation Guide 42003 STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page iii August 2006 INDEX A. Independent Auditor 9s Report on the Financial Statements 1 B. Management Discussion and Analysis (MD&A) 5 C. Basic Financial Statements 6 D. Statement of Net Assets 8 E. Statement of Activities 13 F. Governmental Fund Financial Statements 16 G. Proprietary Fund Financial Statements 18 H. Fiduciary and Similar Components 21 I. Budgetary Comparison Schedules 22 J. Notes to the Financial Statements 23 K. Required Supplementary Information 48 L. Combining Statements and Individual Budget Comparison Statements 50 M. Report on Compliance and on Internal Controls over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 51 N. Schedule of Expenditures of Federal Awards (Single Audit only) 52 O. Auditor 9s Report on Compliance with Requirements Applicable to Each Major Program and Internal Controls over Compliance in Accordance with 0MB Circular A-133 (Single Audit) 53 P. Schedule of Findings and Questioned Costs 55 Q. Fraudulent Activities 56 R. Other 56 S. Clerical Accuracy 57 STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 1 August 2006 QUESTION YES NO N/A REF A. INDEPENDENT AUDITOR 9S REPORT ON THE BASIC FINANCIAL STATEMENTS 1. Does the Financial Report include an independent auditor 9s report on the basic financial statements issued by a certified public accounting firm? (AU 508.08) Does that report include the following basic elements: a. Introductory paragraph, which identifies the entity, the financial statements being audited and the responsibility of the auditor and entity 9s management? b. Scope paragraph, which identifies the auditing standards applied, what those standards require, the nature of an audit, and whether the auditor believes the audit provides a basis for rendering an opinion? c. Opinion paragraph, which includes the auditor 9s opinions on whether the financial statements are fairly presented? d. Additional paragraphs required by the individual engagement? e. Manual or printed signature of the audit firm? f. Date of the audit report? 2. Does the title of the auditor 9s report include the word independent ? (AU 508.08) 3. Does the auditor 9s report indicate that the audit was performed in accordance with auditing standards generally accepted in the United States of America? (AU 508.08) Should include statement that the audit was conducted in accordance with generally accepted auditing standards and an identification of the United States of America as the country of origin of those standards (for example, auditing standards generally accepted in the United States of America or U.S. generally accepted auditing standards). 4. Does the auditor 9s report refer to Government Auditing Standards? This is required for any audit of a county and at least any engagement subject to the Single Audit Act. (GAO 5.05, OMB A-133 .500, AAG-SLV 14.78, and OSA-CAG V. b.) When the report on the financial statements is submitted to comply with a requirement for an audit in accordance with Government Auditing Standards , audit reports should state that the audit was made in accordance with generally accepted government auditing standards. The AICPA 9s audit guide recommends the following language be included in the auditor 9s report to meet this requirement: cwe conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standard , issued by the Comptroller General of the United States. d (GASCA133 4.21 d.) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 2 August 2006 QUESTION YES NO N/A REF a. Does the auditor 9s report on the financial statements either (1) describe the scope of the auditors 9 testing of compliance with laws and regulations and internal controls and present the results of those tests or (2) refer to separate reports containing that information? When auditors report separately on consideration internal control over financial reporting and compliance with laws and regulations, the report on the financial statements should state that they have issued the additional report. It should also state that the report on compliance with laws, regulations, contracts, and grant agreements and other matters and internal control over financial reporting is an integral part of an audit performed in accordance with Government Auditing Standards, and that the purpose of that report is to describe the scope of testing of internal control over financial reporting and compliance and the results of that testing, and not to provided an opinion on the internal control over financial reporting or compliance and should be considered in assessing the results of the audit of the financial statements. (GAO 5.08 and GASCA133 4.21 i.) 5. Does the introductory paragraph of the independent auditor 9s report should refer to the audit of the financial statements of each opinion unit, even though some of those opinion units do not have distinct or separate financial statements? ( Note: AAG-SLV 14.78, Example 14A.1 illustrate the following for the introductory paragraph of the auditor 9s report to meet this requirement: cWe have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Example, Any State, as of and for the year ended June 30, 20XX, which collectively comprise the city 9s basic financial statements. d) (AAG-SLV 14.13) 6. Does the introductory paragraph include a statement that the financial statements are the responsibility of management and that the auditor 9s responsibility is to express opinions on the financial statements based on the audit? (AU 508.08 and AAG-SLV 14.14). (Note: AAG-SLV 14.14 requires the introductory paragraph of the audit report state that the auditor 9s responsibility is to express copinions d on the financial statements based on his or her audit) 7. Does the scope paragraph include a statement that generally accepted auditing standards require that the auditor plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement? (AU 508.08) (Note: AAG-SLV 14.14 states, cEven though the auditor 9s report generally will provide more than one opinion, the auditor is only conducting one audit. Therefore, the scope paragraph refers to only one audit d ) a. Has the audit elected to include option language describing the consideration of internal controls over financial reporting and, if so, is the language appropriate? (AU 9508.85-.88) Optional Wording: An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the centity 9s d internal control over financial reporting. Accordingly, we express no such opinion. 8. Does the scope paragraph include a statement that an audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation? (AU 508.08) 9. Does the scope paragraph include a statement that the auditor believes that the audit provides a reasonable basis for the auditor 9s opinions? (AU 508.08) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 3 August 2006 QUESTION YES NO N/A REF 10. Does the auditor 9s standard report on a government 9s basic financial statements state that the financial statements present fairly, in all material respects, the financial position, changes in financial position, and cash flows, where applicable of each opinion unit in those financial statements in conformity with GAAP? The opinion should include an identification of the United States of America as the country of origin of those accounting principles (for example, accounting principles generally accepted in the United States of America or U.S. generally accepted accounting principles. (AU 508.08) (AAG-SLV 14.12) (Note: AAG-SLV 14.78, Example 14A.1 illustrates the following for the opinion paragraph of the auditors report to meet this requirement: cIn our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Example, Any State, as of June30, 20X1, and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America.) 11. If the required budgetary comparison information is presented as a basic financial statement, does the opinion paragraph refer to the budgetary comparisons for those funds? (AAG-SLV 14.14) The suggest wording is: c&and the respective budgetary comparisons for the [indicate the general and major special revenue funds involved] for the year then ended in conformity with& d (AAG-SLV 14.78, Example 14A.1, footnote 31) 12. Does the auditor 9s report clearly indicate the character of the auditor 9s work and the degree of responsibility taken if combining statements, individual fund, and/or other supplementary data accompanies the basic financial statements? (AU 551) In accordance with the provisions of GASCA133 12.12 , the auditor 9s report on the financial statements should include: a. a description of the accompanying supplementary information (for example, the schedule of expenditures of federal awards, financial data schedule (FDS), combining and individual fund financial statements and schedules, etc.). This identification may be by descriptive title or by page number of the document. b. a statement that the accompanying supplementary information, including the schedule of expenditures of federal awards required by Circular A-133, is presented for purposes of additional analysis and is not a required part of the financial statements. c. an opinion on whether the accompanying supplementary information is fairly stated, in all material respects, in relation to the financial statements taken as a whole. (Note to Reviewer: If the schedule of expenditures of federal awards is not presented with the financial statements, consult GASCA133 12.12 and 12.15) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 4 August 2006 QUESTION YES NO N/A REF 13. An auditor is required to report on required information (RSI) if: a. the supplementary information required by FASB or GASB is omitted, b. the auditor has concluded that the measurement or presentation of the supplementary information departs materially from prescribed guidelines, c. the auditor is unable to complete the prescribed procedures, or d. the auditor is unable to remove substantial doubts about whether the supplementary information conforms to prescribed deadlines. Does the auditor 9s report refer to such omissions or departures? (AAG-SLV14.54) (Note: AU 558.08 includes example formats of the explanatory paragraphs) The omission of required supplementary information (RSI) or the presentation of RSI in a manner that does not meet the standard established by GASB will not affect the auditor 9s conclusion regarding the fair presentation of the basic financial statements. (AAG-SLV 14.52) 14. If the financial report is an auditor-submitted document and includes supplementary information required by FASB or GASB presented outside the basic financial statements, has the auditor disclaimed an opinion on the information unless the auditor has been engaged to examine and express an opinion on it? (AU 551.15) (Note to reviewer: Example format is included in AU 551.15. Required supplementary information includes disclosures relating to defined benefit pension plans (GASB Cod. Sec. P20.119 and Pe5. 125-.132) and public entity risk pools included as part of a combined general government reporting entity (Po20. 148)) 15. When the principal auditor decides to make reference to the audit of another auditor, the principal auditor 9s report should indicate clearly, in the introductory, scope and opinion paragraphs, the division of responsibility as between that portion of the financial statements covered by the audit of the principal auditor and that covered by the audit of the other auditor. The report should disclose the magnitude of the portion of the financial statements audited by the other auditor. (AU 543.07) (Note to Reviewer: Example format is included in AU 543.09.) 16. When financial statements are materially affected by a departure from generally accepted accounting principles (GAAP), the auditor should express a qualified or adverse opinion. All of the substantive reasons leading to the conclusion that there has been a departure from GAAP should be disclosed in explanatory paragraphs preceding the opinion paragraph. If practicable, the explanatory paragraph(s) should also disclose the principal effects of the subject matter on financial position, results of operations, and cash flows. (AU 508.35-.60) If the opinion is other than unqualified: a. Are there separate explanatory paragraphs preceding the opinion paragraph disclosing each substantive reason for withholding an unqualified opinion? (AU 508.21, .25, .37, .42, .52, .59, and .62, 623.05) b. Are the principal effects of each qualification of the opinion given? The opinion should disclose the effect if reasonably determinable or, if not reasonably determinable, the report should so state. (AU 508.26, .38, and .59) c. Did improper implementation of GASB 34 impact the auditor 9s opinion in the following ways: i. Adverse opinion if anything less than a full set of financial statements as required by GASB 34; ii. Adverse opinion if the old model is presented instead of the new model under GASB 34; iii. Modified opinion if a component unit failed to implement GASB 34 in the same fiscal period as the primary government; or STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 5 August 2006 QUESTION YES NO N/A REF iv. Adverse opinion if infrastructure is excluded from the government-wide statements and it is significant 17. Reference to the financial statements taken as a whole applies not only to the financial statements of the current period but also to those of one or more prior periods that are presented on a comparative basis with those of the current period. Therefore, if necessary, has a continuing auditor updated the report on the individual financial statements of the one or more prior periods presented on a comparative basis with those of the current period? (AU 508.65) (Note to reviewer: Footnote 24 of AU 508 states, in part, that ca continuing auditor need not report on the prior-period financial statements if only summarized comparative information of the prior period(s) is presented. For example, entities such as state and local governmental units and not-for-profit organizations frequently present total-all-funds information for the prior period(s) rather than information by individual funds because of space limitations or to avoid cumbersome or confusing formats. d ) 18. If separate financial statements are issued on the primary government without the component units, does the report acknowledge that the financial statements do not include the data of the component units necessary for reporting in conformity with GAAP? (GASB 14 ¶ 64) 19. For separate financial reports of entities consisting of less than the primary government (or other if it is of component units), does the Independent Auditor 9s Report include an explanation paragraph referencing the Summary of Significant Accounting Principles disclosure regarding the reporting entity, and indicate that the financial statements present the financial position and results of operation of only that portion of the financial reporting entity of the primary government that is attributable to the transactions of the auditee. (AAG-SLV 14.78, Example 14A.14) 20. Does the auditor 9s opinion appropriately state when the material accounting principles have not been consistently applied with those of the preceding period? (AU 420.05 and AU 508.16 to .18) a. If GASB 34 was implemented during the fiscal year and the effect was material for the agency, was there an explanatory paragraph? 21. If the statements are not presented on an accounting basis in accordance with accounting principles generally accepted in the United States of America, are the departures disclosed and the opinion on the financial statements appropriately modified? (AU 508.35-.60) 22. If the auditor is not independent, does the report disclaim an opinion with respect to the financial statements and state specifically that the auditor is not independent? (AU 504.08- .10) 23. A change in the reporting entity is a special type of change in accounting principle, which results in financial statements that, in effect, are those of a different reporting entity. A change in the entities included in reporting entity financial statements that does not result from a specific transaction or event is a change in the reporting entity. This type of change requires recognition in the auditor 9s report through inclusion of an explanatory paragraph. (AU 420.07-.08) 24. The auditor 9s report should disclose, in accordance with generally accepted government auditing standards, any apparent material violation of state or local law discovered during the audit. (GAO 5.12) B. MANAGEMENT 9S DISCUSSION AND ANALYSIS (MD&A) 1. Does the financial report include the Management 9s Discussion and Analysis (MD&A), which immediately precedes the basic financial statements? (GASB Cod. Sec. 2200.102) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 6 August 2006 QUESTION YES NO N/A REF 2. Does the MD&A include the following required elements, if applicable: (GASB Cod. Sec. 2200.109 a. A brief discussion of the basic financial statements? GASB Cod. Sec. 2200.109 a.) b. Condensed financial information derived from the government-wide financial statements? GASB Cod. Sec. 2200.109 b.) i. Is the information presented comparing the current year to the prior year? (GASB Cod. Sec. 2200.109 b.) Note: For the year of implementation of GASB 34 only the current year is required, but should state that comparative will be available in subsequent years. ii. Are the required condensed financial items presented? (GASB Cod. Sec. 2200.109 b.) c. An analysis of the government 9s financial position and results of operations, including reasons for significant changes? (GASB Cod. Sec. 2200.109 c.) d. An analysis of balances and transactions of individual funds, at least all major funds, including reasons for significant changes? (GASB Cod. Sec. 2200.109 d.) e. An analysis of significant variations between original and final budget amounts and between final budget and actual results, including reasons for significant variations? (GASB Cod. Sec. 2200.109 e.) f. A description of significant capital asset and long-term debt activity? (GASB Cod. Sec. 2200.109 f.) g. If applicable, a discussion of the governments use of the modified approach for reporting any infrastructure? (GASB Cod. Sec. 2200.109 g.) h. A description of currently known facts, decisions, or conditions that are expected to have a significant effect on financial position (net assets) or results of operations (revenues, expenses, and other changes in net assets)? 3. Does the MD&A only include the required elements? (GASB 37 ¶ 4) 4. Do the amounts in the MD&A agree to the amounts in the basic financial statements? (Consistency within report) 5. Does the MD&A focus on information pertaining to the primary government? (Information relating to discretely presented components units may be included but the MD&A must clearly distinguish between the two. (GASB Cod. Sec. 2200.108) C. BASIC FINANCIAL STATEMENTS 1. General Issues a. Is each of the statements in the basic financial statements referenced to the notes to the financial statements as an integral part? (GASB Cod. Sec. 2300.102-.103, and .110) b. Are the basic financial statements divided into sections for the government-wide financial statements and the fund level financial statements? (GASB Cod. Sec. 2200.105 b.) c. Are the fund level financial statements further divided into statements for governmental, proprietary and fiduciary funds, if applicable? (GASB Cod. Sec. 2200.105 b.) d. Are amounts presented for beginning of the balances (fund balances, net assets, other) traceable to the prior year 9s financial statements? STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 7 August 2006 QUESTION YES NO N/A REF 2. Component Unit Presentation Issues a. Is an overview of the discretely presented component units included in the Statement of Net Assets and the Statement of Activities, except for component units that are fiduciary in nature, which should be included with fiduciary fund statements? (GASB Cod. Sec. 2600.107 and GASB 34 ¶125) i. Are the columns located to the right or below of the financial data of the primary government for the discrete presentation of component unit 9s financial data? ii. Are component unit columns appropriately labeled ccomponent unit(s)? d b. If needed, are combining statements for component units (not just major ones) included in the reporting entity 9s basic statements after the fund financial statements or in as condensed financial statements in the notes to the financial statements? (GASB Cod. Sec. 2600.103) i. If separately issued reports are not available on the component unit, are underlying fund types of the individual component units presented? (AAG-SLV 3.20) ii. Are the combining statements at the minimum level of detail required by GASB 34 ¶ 127? iii. If the approach used to present the component units in the entity 9s basic financial statements is condensed financial statements in the notes, are the following minimum details presented? Condensed statement of net assets (GASB 34 ¶ 127): (a) Total assets 4 distinguishing between capital assets and other assets. Amounts receivable from the primary government or from other component units should be reported separately. (b) Total liabilities 4 distinguishing between long-term debt outstanding and other liabilities. Amounts payable to the primary government or to other component units should be reported separately. (c) Total net assets 4 distinguishing between restricted, unrestricted, and amounts invested in capital assets, net of related debt. Condensed statement of activities: (a) Expenses (by major functions and for depreciation expense, if separately reported.) (b) Program revenues (by type) (c) Net program (expense) revenue (d) Tax revenues (e) Other non-tax general revenues (f) Contributions to endowments and permanent fund principal (g) Special and extraordinary items (h) Changes in net assets (i) Beginning net assets (j) Ending net assets iv. Do the total columns from the component unit combining statements aggregate to support government-wide statements as required by GASB 34 ¶ 126. STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 8 August 2006 QUESTION YES NO N/A REF d. For each major component unit, is the nature and amount of significant transactions with the primary government and with other component units disclosed in the notes? (GASB 34 ¶l28) e. Are all resource flows between the primary government and its discretely presented component units (except those that affect the balance sheet only, such as loans and repayments) reported as if they were external transactions 4that is as revenues and expenses? (GASB 34 ¶ 61 and also ¶ 318) f. Is segment disclosure included for proprietary component units that are significant to the total of the discretely presented component units and to the primary government? See section J.16.c below for the disclosure detail required. (GASB 34 ¶ 122) D. STATEMENT OF NET ASSETS 1. General a. Is the statement titled correctly as Statement of Net Assets? (GASB 34 Appendix C, illustrations A-1 and A-2) b. Are all governmental activities presented in a column separate from business-type activities of the primary government? c. Is there a column showing totals of the governmental and business-type activity of the primary government? d. Is each column appropriately titled? e. Does the statement correctly not reference cMemorandum Only d for the total or any other column? (GASB 34 ¶ 304) f. Does discretely presented component unit information appear in a column to the right of the primary government total column? (GASB 34 ¶ 12(c)) g. If the agency is a special-purpose government (legally separate entity, and may be a component unit of other stand-alone governments) engaged in only a single governmental program (cemetery districts, watershed districts, soil and water conservation districts) with no component unit(s), the entity may use one of the following methods of reporting: (GASB 34 ¶¶ 134 and 136) i. Fund financial statements and the government-wide financial statements may be combined using a columnar format that reconciles individual line items of fund financial data to government-wide data in a separate column on the face of the financial statements rather than at the bottom of the statements or in an accompanying schedule (GASB 34, Illustrations A-4 and B-6); or ii. The agency may present separate government-wide and fund financial statements and may present its government-wide statement of activities using a different format, a single column that reports expenses first followed by revenues (by major sources). The difference between these amounts is net revenue (expense) and should be followed by contributions to permanent and term endowments, special and extraordinary items, transfers, and beginning and ending net assets. (GASB 34, Illustrations A-3 and B-5) h. Are all assets, both current and capital, and current, short-term, and long-term liabilities included in the statement of net assets? (GASB 34 ¶ 12 (e)) i. Are capital assets shown in the governmental activities column and the business- type activities column if applicable? ii. Are general capital assets (not proprietary or fiduciary) shown in the governmental activities column of the government-wide statement of net assets and not shown in the governmental funds financial statements? (GASB 34 ¶ 80) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 9 August 2006 QUESTION YES NO N/A REF iii. Are enterprise fund capital assets included in both the government-wide business- type activities columns and in the Statement of Net Assets 4Proprietary Funds (Balance Sheet 4Proprietary Funds) of the fund financial statements? (GASB 34 ¶ 80) i. Are assets and liabilities presented in the order of their relative liquidity or in a classified format? (GASB 34 ¶ 31 and GASB 34, Illustrations A-1 to A-3) j. Are liabilities whose average maturities are greater than one year reported in two separate parts, the amount due within one year and the amount due in more than one year? (GASB 34 ¶ 31) k. Are primary government and component unit fiduciary activities excluded from the statement of net assets? (GASB 34 ¶ 12 (b)) l. If the format used displays assets less liabilities equal net assets, do the net assets shown plus the liabilities shown equal the assets shown? (GASB 34 ¶30 and GASB 34, Illustration A-1) i. If the balance sheet format is used (assets equal liabilities plus net assets), is there a total for the liabilities, a total of net assets, and then a total for liabilities and net assets? Do the total assets equal the total liabilities and net assets for all columns presented? (GASB 34 ¶30 and GASB 34, Illustration A-2) ii. Regardless of which presentation is used, does the statement of net assets report the difference between assets and liabilities, as net assets and not fund balances or equity? (GASB 34 ¶ 30) m. Are internal balances eliminated in the statement of net assets to minimize the grossing up of internal balances, leaving a net amount due between the governmental and business-type activities that is eliminated in the total primary government column? Amounts report in the fund financial statements as interfund amounts with the fiduciary funds should be included as receivables or payables to external parties in the statement of net assets (GASB 34 ¶ 58 and GASB 34, Illustration A-1) n. Are amounts payable and receivable between the primary government and its discretely presented component units or between those components reported on a separate line? (GASB 34 ¶61) o. Are internal service fund asset and liability balances that were not eliminated in the statement of net assets reported in the governmental activities column? (If the enterprise funds are the predominant or only participants in the internal service fund, the internal service fund 9s residual assets and liabilities should be reported within the business-type activities column in the statement of net assets.) (GASB 34 ¶62) 2. Cash, Investments, and Receivables a. Restricted cash and investments i. If the classified format is used, a portion of cash and investments in the capital projects and permanent funds may meet the criteria to be segregated from current assets if they will not be used in current operations. If applicable, are such restricted amounts appropriately segregated? (Question 10 of Guide to Implementation of GASB Stmt 34 and Related Pronouncements or as reformatted C-Q&A Q 7.117 ) ii. For business-type activities are restricted cash and/or investments properly shown as segregated from other cash items possibly to the point of being noncurrent assets? (ARB No. 43, ch. 3A ¶ 6 ) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 10 August 2006 QUESTION YES NO N/A REF b. Are material bank overdrafts presented as a separate caption among current liabilities (AAG-SLV ¶ 5.26)? Are material dollar amounts of held checks (checks on the bank reconciliation but not released until after the balance sheet date) reclassified as accounts payable? c. Are security-lending transactions reported as assets and liabilities on the balance sheet? (GASB Cod. Sec. I60.103-108) i. The assets and liabilities arising from reverse repurchase and fixed coupon reverse repurchase agreements should not be netted on the balance sheet. These agreements should be reported as a fund liability captioned cObligations under reverse repurchase agreements and the underlying securities should be reported as investments. (GASB 3 ¶ 81) d. Receivables reported on the statements of net assets and balance sheets may aggregate different components such as balances due from taxpayers, other governments, vendors, customers, beneficiaries, and employees, but the notes should provide details when significant components have been obscured by aggregation. If receivable balances have different liquidity characteristics, have amounts not expected to be collected within one year been separately disclosed? (GASB 38 ¶ 13) e. Are amounts reported in the fund financial statements as interfund amounts with the fiduciary funds included as receivables or payables to external parties in the statement of net assets? (GASB 34 ¶ 58) f. Accounting and financial reporting standards for investments (GASB Cod. I50 .101 to .118) i. Have external investment pools reported investments at fair value in their basic statements? In general, participating contracts are reported at fair value and nonparticipating contracts, such as nonnegotiable certificates of deposit with redemption terms that do not consider market rates, should be reported using a cost-based measure. However, external investment pools may not report money market (short-term highly liquid debt instruments including commercial paper, bankers acceptances, and U.S. Treasury and agency obligations) investments and participating interest-earning investment contracts with a remaining maturity at of one year or less at amortized cost. (GASB Cod. Sec. I50.107) ii. Government entities (not investment pools) valuation and reporting: (a). Are open-end mutual fund investments 9 fair value determined by the fund 9s current share price? (GASB Cod. Sec.I50 .108) (b). Are investment positions in a 2a7-like pool determined by the pool 9s share price? Investment positions in external investment pools that are not SEC- registered fair value are determined by the fair value per share of the pool 9s underlying portfolio. Legally binding guarantees to support share value should be considered in determining the fair value of the participants 9 investment and should be evaluated in light of the creditworthiness of the sponsor. (GASB Cod. Sec. I50.109) (c). If a governmental entity cannot obtain information from a pool sponsor to allow it to determine the fair value of that investment, did they disclose the methods used and significant assumptions made in determining that fair value and the reasons for having had to make such an estimate? (GASB Cod. Sec. I50.109) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 11 August 2006 QUESTION YES NO N/A REF (d). Are investments in participating (negotiable or transferable and value affected by interest rate changes) interest-earning investment contracts reported at fair value? Nonparticipating contracts like nonnegotiable certificates of deposit with redemption terms that do not consider market rates, should be reported using a cost-based measure, provided the fair value of those contracts is not significantly affected by the impairment of the credit standing of the issues or other factors. Money market investments (commercial paper, bankers 9 acceptances, and U.S. Treasury and agency obligations) and participating interest-earning investment contracts with a remaining maturity at time of purchase of one year or less may be reported at amortized cost, provided that the fair value is not significantly affected by the impairment of the credit standing of the issuer or other factors. (GASB Cod. Sec I50.107) g. Are related party receivables and payables presented separately in the balance sheet? (ARB 43, ch. 1A ¶ 5) 3. Capital Assets a. Are capital assets reported net of accumulated depreciation? Accumulated depreciation may be reported on the face of the statement or disclosed in the notes. (GASB 34 ¶ 20) b. Are significant nondepreciable assets (land, construction in progress, or infrastructure reported under the modified approach) reported separate from the depreciable capital assets? (GASB 34 ¶ 20) c. Are capital assets acquired via lease agreements capitalized at the inception of the agreement with a related liability in the same amount recorded simultaneously? The portion of the liability due within the first fiscal year should be shown as a current liability; with the remaining portion being classified as a long-term liability or amounts due within one year vs. amounts due within more than one year. (GASB Cod. Sec. L20.113 and SFAS 13 ¶ 13 and 16) 4. Liabilities a. Are significant payable categories (i.e., balances due taxpayers, other governments, vendors, customers, beneficiaries, and employees) disclosed in the notes to the financial statements if they were aggregated in the statement of net assets or balance sheet presentations? (GASB 38 ¶ 13) b. Are Significant categories of debt identified; e.g. general obligation bonds, revenues bonds, special assessment bonds, anticipation notes, obligations under capital leases? (SFAS 13 ¶ 13) c. Are general long-term liabilities recorded in the governmental activities column of the statement of net assets and not in the governmental funds financial statements? See GASB 34 ¶ 81 for the definition of general long-term liabilities and note that liabilities arising from interfund activities are not general long-term liabilities. (GASB 34¶ 82) i. Is the unmatured principal of bonds, warrants, notes, or other forms of noncurrent or long-term general obligation indebtedness included in the governmental activities column? ii. Are noncurrent liabilities on lease-purchase agreements and other commitments that are not current liabilities properly included in the governmental activities column? (a) Noncurrent portion of capital leases STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 12 August 2006 QUESTION YES NO N/A REF (b) Noncurrent portion of operating leases with scheduled rent increases (GASB 13) (c) Noncurrent portion of compensated absences (d) Noncurrent portion of claims and judgments, pensions, special termination benefits (e) Noncurrent portion of landfill closure and postclosure care liabilities d. If a note is noninterest bearing or has an inappropriate stated interest rate: is the discount or premium presented as a deduction from or addition to the face amount of the note; does the disclosure include the effective interest rate and face amount of the note; and is amortization of the discount or premium reported as interest in the operating statement? (AC Sec. I69.109 (APB 21 ¶ 16)) e. If presenting a classified statement of net assets, are current portions of debt obligations presented as current liabilities? (GASB 34 ¶ 3) f. Does the current liability classification include obligations that, by their terms, are due on demand or will be due on demand within one year (or operating cycle, if longer) even though liquidation may not be expected within that period? (GASB Cod. Sec. D30.107 to .111) f. Contingent Liabilities 4If a claim was asserted and the probable loss was reasonably estimable, was the expenditure/expense and liability recognized in the financial statements? Claims liabilities should be based on the estimated ultimate cost of settling the claims (including the effects of inflation and other societal and economic factors), suing past experience adjusted for current trends, and any other factors that would modify past experience. Claims liabilities should include specific, incremental claim adjustment expenditures/expenses. In addition, estimated recoveries on unsettled claims, such as salvage or subrogation, should be evaluated in terms of their estimated realizable value and deducted from the liability for unpaid claims. Estimated recoveries on settled claims also should be deducted from the liability for unpaid claims. (GASB Cod. Sec. 1500.113-. 114) 5. Net Assets a. Is the difference between assets and liabilities reported as net assets in three components (if applicable): invested in capital assets, net of related debt; restricted; and unrestricted? (There should be no fund balances, retained earnings, or contributed capital in the government-wide statements.) (GASB 34 ¶32) b. Invested in capital assets, net of related debt; (GASB 34¶33) i. Does the amount include capital assets and restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets? ii. If there are significant unspent related debt proceeds at year-end, is the portion of the debt attributable to the unspent proceeds excluded from the calculation of invested in capital assets, net of related debt, and included in the same net assets component as the unspent proceeds 4for example, restricted for capital projects. STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 13 August 2006 QUESTION YES NO N/A REF c. Are restricted net assets only that portion of net assets that is restricted due to constraints placed on net assets use due to either: 1) Externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments 2) Imposed by law through constitutional provisions or enabling legislation? (GASB 34 ¶34) i. Does it appear that the restrictions on the use of net assets are legally enforceable? (GASB 34 ¶34) d. If permanent endowments or permanent fund principal amounts are included in restricted net assets, are the expendable and nonexpendable components of restricted net assets presented? (GASB 34, ¶ 35) e. Are designations of net assets excluded from the statement of net assets? (GASB 34 ¶37) E. STATEMENT OF ACTIVITIES 1. Do the financial statements include a statement of activities and is it titled as such? (GASB Cod. Sec, 2200.126) 2. If the government is engaged in more than one government program, or has both governmental and business-type activities, is the net (expense) revenue format used to report each of the government functions? (GASB 34 ¶ 38 and ¶ 135, GASB 34, Illustration B-1, and GASB 37 ¶ 11) 3. Are the governmental activities presented at least at the level of detail required in the governmental fund statement of revenues, expenditures, and changes in fund balances 4at a minimum by function? (GASB 37 ¶ 10) 4. Are all expenses reported by function for governmental activities or by activities accounted for in enterprise funds by different identifiable activities for business-type activities, except for those that qualify as special (either unusual or infrequent and within the control of management) or extraordinary (both unusual and. infrequent) items? (GASB 34 ¶¶ 41, 55, and 56 and GASB 37 ¶11) 5. Are direct expenses (clearly identifiable to a particular function) reported for each function? (GASB 34 ¶41) a. If indirect expenses (general government, support services, and administration) are allocated to the other functions of the government, are they shown in a column separate from direct expenses? (GASB 34 ¶42) 6. Is depreciation expense specifically identifiable with a function included in the direct expenses of that function? If applicable, this must include depreciation expense for cshared d capital assets ratably included in the direct expenses of the appropriate functions. (GASB 34 ¶44) a. Is depreciation expense for capital assets such as city hall or a county courthouse building that serve all functions of the government not included in the direct expenses of the various functions? It may be included as a separate line in the statement of activities or as part of the cgeneral government d function and may be allocated to other functions in a separate column. (GASB 34 ¶ 42 and 44) b. Is depreciation expense for general infrastructure assets reported as a direct expense of the function (for example, public works or transportation) that the reporting government normally associates with capital outlays for, and maintenance of, infrastructure assets, or as a separate line in the statement of activities? (GASB 34 ¶45) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 14 August 2006 QUESTION YES NO N/A REF c. Is current year depreciation expense shown for all capital assets unless they are inexhaustible (land or land improvements) or infrastructure reported using the modified approach? (GASB 34 ¶ 21) 7. Is interest expense on general long-term liabilities shown as an indirect expense, on a separate line that clearly indicates that it excludes direct interest expenses, if any, reported in other functions? The amount excluded should be disclosed in the notes or presented on the face of the statement. (GASB 34 ¶ 46) a. If infrequent circumstances exist in which the borrowing is essential to the creation or continuing existence of a program, is the interest expense shown as a direct expense of that program? (GASB 34 ¶46) 8. If applicable are the following three categories of program revenue shown: charges for services or similar title; program-specific operating grants and contributions, including restricted interest (GASB 37 ¶ 12); and program-specific capital grants and contributions? See GASB 34 Illustration B-1 for a multiple-program government example. See GASB 34 Illustration B-5 for a single-program government example. (GASB 34 ¶48 and GASB 37 ¶ 12) a. Charges for services is the term used for a broad category of program revenues that arise from charges to customers, applicants, or others who (1) purchase, use, or directly benefit from the goods, services, or privileges provided, or (2) are otherwise directly affected by the services. Examples are fees for specific services, water use or garbage collection; licenses and permits, operating special assessments, such as for street cleaning or special street lighting, and any other amounts charged to service recipients. Fines and forfeitures are included because they result from direct charges to those who are cotherwise directly affected d by a program or service, even though they receive no benefit. Payments from other governments for goods or services are also included. Are these types of revenues reported as program revenue-charges for services or similar title? (GASB 37 ¶ 13) b. Are program-specific grants and contributions (operating) that arose from mandatory and voluntary nonexchange transactions with other governments, organizations, or individuals that were restricted for use in a particular program but could have been used either for operating expenses or for capital expenditures of the program at the discretion of the reporting government, recorded as program revenue? (GASB 34 ¶50) c. Are program-specific grants and contributions (capital) that arose from mandatory and voluntary nonexchange transactions with other governments, organizations, or individuals that were restricted for use in a particular program, consisting of contributions of capital assets or resources restricted for capital purposes 4 to purchase, construct, or renovate capital assets associated with that specific program, reported as program revenue? (GASB 34 ¶ 50) d. Are multipurpose grants that do not provide for specific identification of the programs and amounts reported as general revenues? (GASB 34 ¶50) 9. Are all revenues that do not meet the criteria of program revenues reported as general revenues after total net expense of the government 9s functions (i.e., taxes, interest, grants, and contributions)? (GASB 34 ¶52) a. Are all taxes levied by the reporting government (C-Q&A, Q 7.191) shown as general revenues? Are the taxes including those levied for a specific purpose reported by type of tax, i.e. sales tax, property tax, franchise tax, income tax? (GASB 34 ¶52) 10. Are the following items reported separate from, but in the same manner as, general revenues, at the bottom of the statement of activities? (GASB 34 ¶53) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 15 August 2006 QUESTION YES NO N/A REF a. Contributions to term and permanent endowments? b. Contributions to permanent fund principal? c. Special and extraordinary items? Have the nature of the event or transaction and the principal items entering into the extraordinary gain or loss been disclosed? (APB No. 30 ¶ 11) Are special items (unusual in nature or infrequent in occurrence and within the control of management) reported separately before extraordinary items (both unusual in nature and infrequent in occurrence)? (GASB 34 ¶56) i. Are gains and losses resulting from involuntary conversions of nonmonetary assets (e.g., property or equipment) to monetary assets (e.g., insurance proceeds) reported as either a special or extraordinary item, as appropriate? (FASBI No. 30, ¶ 4, and GASB 34, ¶ 55 and56) ii. Is the adjustment in the current period of a previously presented extraordinary item presented properly? cEach adjustment in the current period of a loss on disposal of a business segment or of an element of an extraordinary item that was reported in a prior period should be separately disclosed as to year of origin, nature, and amount and classified separately in the current period in the same manner as the original item. d (APB 30 ¶ 25) iii. Are items that are either unusual or infrequent but not within the control of management disclosed in the notes? (GASB 34 ¶56) d. Are transfers between governmental and business-type activities identified (GASB 34 ¶ 53 and ¶ 112(b)(1))? e. Do transfers reconcile (add to zero) between the governmental activities, business- type activities presented in the Statement of Activities? Transfers to or from the fiduciary funds or to or from discretely presented component units, should be treated as external transactions in the statement of activities. (GASB Cod. Sec. 1800.103-.105 and AAG-SLV 9.31) 11. Are property tax revenues and related assets (net of estimated refunds and estimated uncollectible amounts) recognized in the period for which the taxes are levied? (GASB 33 ¶18) a. Are related amounts that are not measurable disclosed? (See J.15.b) below for the disclosure requirement. 12. Are accrued net losses on firm purchase commitments for inventory separately disclosed in the operating statement if material? (AC Sec. I78.122 (ARB No. 43, Ch. 4, ¶ 17 )) 13. Per GASB No. 31, ¶ 13, all investment income, including changes in the fair value of investment, should be recognized as revenue in the operating statement. (GASB Cod. Sec. I50.101, .105, and .111): a. When identified separately as an element of investment income, the change in the fair value of investments should be captioned cnet increase (decrease) in the fair value of investments. d If identified separately, was the change in the fair value reported with the correct caption? b. Realized gains and losses should not be displayed separately from the net increase (decrease) in the fair value of investments in the financial statements, except that realized gains and losses may be separately displayed in the separate reports of governmental external investment pools. Were realized gains and losses reported combined with the net increase (decrease) in the fair value unless the exception applied? STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 16 August 2006 QUESTION YES NO N/A REF c. Was all investment income, including the change in fair value of investments reported as general revenue unless the earnings on the investments are restricted for a specific purpose? Earnings and increases in fair value that are restricted should be reported as program revenues of the function or program to which they are restricted (C-Q&A, Q7.203). 14. Were eliminations made in the statement of activities to remove the cdoubling-up d effect of internal service fund activity? (GASB 34 ¶ 59) Are allocations of overhead expenses from one function to another or within the same function eliminated so that the allocated expenses are reported only by the function to which they were allocated? (GASB 34 ¶ 59) Are interfund reimbursements excluded by the funds initially reporting the expense/expenditure? (GASB 34 ¶ 112 (b)(2)) 15. Are resource flows (except those that affect the balance sheet only, such as loans and repayments) between a primary government and its discretely presently component units reported as if they were external transactions 4 that is, as revenues and expenses? (GASB 34, ¶ 61 and ¶ 112 (a) (2)) 16. Are interfund loans between the proprietary funds and the governmental funds or fiduciary activities reported as interfund receivables and payables? Note that any amount not expected to be repaid within a reasonable amount of time should be reported as a transfer from the fund that made the loan to the fund that received the loan. (GASB 34¶ 112(a) (1)) F. GOVERNMENTAL FUND FINANCIAL STATEMENTS 1. Do the governmental fund financial statements present a column for each of the major funds, a column for the total nonmajor funds aggregated, and a total column? (GASB 34 ¶¶ 75, 76, 83, and 86) a. Are at least all funds that pass both the 10% and 5% tests to qualify as major funds shown as major funds? Management may choose to show additional funds as cmajor d if they believe a fund is particularly important to the report users. (GASB 34 ¶76) 2. Are the governmental fund statements titled (GASB 34 ¶ 78 and Appendix C, Illustrations C- 1 and C-2) a. Governmental Funds Balance Sheet? b. Statement of Revenues, Expenditures, and Changes in Fund Balances 4 Governmental Funds? 3. Do the governmental fund statements report only information about the current financial resources (assets, liabilities, and fund balances)? There should be no capital assets or long- term debt reported in the governmental fund statements. (GASB 34 ¶79 and ¶80) a. Is the modified accrual basis of accounting used to report the governmental fund information? (There may be revenue included in the full accrual of the government- wide statements that does not meet the cavailable d criteria to be included in the modified accrual revenue, causing a reconciling difference) (GASB 34 ¶79) 4. Do the total liabilities plus funds balance shown equal the total assets shown? (GASB 34 ¶ 83 and Appendix C, Illustration C-l) a. Do the ending fund balances shown in the statement of revenues, expenditures, and changes in fund balance-governmental funds, equal the total fund balances shown on the balance sheet governmental funds? 5. If the summary reconciliation of the government-wide financial statement at the bottom of the fund financial statements (or shown in an accompanying schedule) obscures the nature of the individual elements of a particular reconciling item, is a more detailed explanation provided in a note to the financial statements? (GASB 34, ¶ 77) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 17 August 2006 QUESTION YES NO N/A REF 6. Are the following reconciling items shown in the reconciliation (if applicable)? (GASB 34, ¶ 85) a. Reporting capital assets at their historical cost and depreciating them (government- wide) instead of reporting capital acquisitions as expenditures when incurred (governmental fund) b. Adding general long-term liabilities not due and payable in the current period (government-wide) c. Reducing deferred revenue for those amounts that were not available to pay current- period expenditures (governmental funds) d. Adding internal service fund net asset balances (government-wide) 7. Are the governmental fund balances segregated into reserved and unreserved amounts? (GASB 34, ¶ 84) a. Are the reserved fund balances of the combined nonmajor funds displayed in sufficient detail to disclose the purposes of the reservations (for example reserved for debt service or reserved for encumbrances)? b. Are the unreserved fund balances of nonmajor funds displayed by fund type on the face of the balance sheet? 8. Are revenues classified by fund and major source, taxes, licenses and permits, intergovernmental revenues, charges for services, fines and forfeits, and miscellaneous? (GASB Cod. Sec. 1800.115) 9. Are expenditures classified by fund, function, (or program), organization unit, activity, character (current, capital outlays, and debt service), and object class? (GASB Cod. Sec. 1800.116 to .121) GASB 34 ¶ 87 requires that expenditures should be classified at a minimum by function 10. Are debt issue costs paid out of debt proceeds, such as underwriter fees, reported as expenditures? Are issue costs, such as attorney and rating agency fees or bond insurance, paid from existing resources reported as expenditures when the related liability is incurred? (GASB 34 ¶ 87) 11. Are the face amount of long-term debt, issuance premiums or discounts, interfund transfers, and sales of capital asset proceeds shown as other financing sources and uses (unless the criteria for special items in GASB 34 ¶ 56 is met)? (GASB 34 ¶ 88 as amended by GASB 37 and GASB Cod. Sec. 1800.109, .110 & .112 and D20.106) a. Are debt-refunding issuances reported as other financing source 4refunding bonds and certain payments to the escrow agent from resources provided by the new debt reported as an "other financing use 4payment to refunded bond escrow agent"? (GASB 34 ¶ 89 and GASB Cod. Sec. 1800.109, D20.106) 12. Are transfers between the funds shown as other financing sources and uses in the governmental funds? (GASB 34 ¶ 112 (b)(1))) 13. Are special items (significant transactions within the control of management that are either unusual in nature or infrequent in occurrence) reported separately after other financing sources or uses and before extraordinary items? (GASB 34 ¶ 89, APB 30 ¶ 26, and FASBTB 82-1 ¶ 6) 14. Are significant transactions or other events that are either unusual or infrequent but are not within the control of management separately identified within the appropriate revenue or expenditure category in the statement of revenues, expenditures, and changes in fund balances or disclosed in the notes? (GASB 34 ¶ 89, AC Sec. I22.101 (APB 30 ¶ 26), and AC Sec. I27.505 (FASBTB 82-1 ¶ 6)) STATE OF MINNESOTA OFFICE OF THE STATE AUDITOR DESK REVIEW CHECKLIST 3 GAAP VERSION Page 18 August 2006 QUESTION YES NO N/A REF 15. Are extraordinary items (both unusual in nature and infrequent in occurrence) reported separately after other financing sources and uses near the bottom of the operating statement? (GASB 34 ¶ 89, AC Sec. I17.102 (APB 30 ¶ 11)) G. PROPRIETARY FUND FINANCIAL STATEMENTS 1. Do the proprietary fund financial statements present a column for each of the major funds, a column for the total nonmajor funds aggregated, and a total column? (GASB 34, ¶75, 76, and 96) a. Are at least all funds that pass both the 10% and 5% tests to qualify as major funds shown as major funds? Management may choose to show additional funds as cmajor d if they believe a fund is particularly important to the report users. (GASB 34, ¶ 76) b. If the statement of net assets format is used, do the total net assets plus the total liabilities equal the total assets? If the balance sheet format is used do the total liabilities and net assets equal the total assets? c. Do the total net assets 4ending amounts shown in the statement of revenues, expenses, and changes in fund net assets-proprietary funds equal the total net assets shown in the balance sheet 4proprietary fund statement, or the total net assets shown in the statement of net assets 4proprietary funds? d. If reclassification of the internal services funds did not effect the enterprise funds, do the amounts in the enterprise total column of the Statement of Net Assets (Balance Sheet) 4Proprietary Funds tie to the amounts shown in the government-wide Statement of Net Assets, business-type activities column? If effected by reclassification does the statement include a reconciliation required by internal services fund activity adjustments? Do the amounts in the enterprise tot

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