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Association of Theological Schools CFOs Conference

Getting Compliant with Compliance


November 11, 2015

Dan Campbell, CPA


Partner, CapinCrouse LLP

Debbie Kellar
VP of Finance, Denver Seminary
Overview of AU-C 250
Consideration Of Laws & Regulations
In Financial Statement Audits
Audit
Audit An evaluation of a person,
organization, system, process or project.
Are policies and procedures being
adhered too?

Compliance
Compliance Conformity in fulfilling official
requirements.
Are you in the fire fighting business or in
the business of fire prevention?
The Clarified Standards:
Statements on Auditing Standards No.
122-125
Why the new standards?
SAS Nos. 122-125 resulted from the AICPA Auditing
Standards Boards (ASB) Clarity Project
The Clarity Project had two primary objectives in the
Codification of Statements on Auditing Standards

1. Codification - To make the standards easier to read,


understand and apply (codification)
2. Convergence - To converge the standards with those of the
International Auditing and Assurance Standards Board (IAASB)
Effective fiscal years ending after December 31, 2012
Benefits of the New Standards
Some of the overall benefits
Provide a better alignment of the audit procedures to be
performed with the risk assessment standards
Provide more detailed guidance
Consistent, easier-to-read format
Scope of Changes
SAS Nos. 122-125 impact engagements at all phases
engagement acceptance
preplanning and assessment
fieldwork and reporting

Shifts some prior implicit understandings in the


existing auditing standards to an explicit requirement
one that often requires documentation
AU-C Section 250
Applies to clients compliance with laws and regulations
in two categories:
1. Those recognized to have a direct and material effect on
the amounts and disclosures in the financial statements
(e.g. tax and pension laws and regulations)
2. Those that are not recognized to have a direct effect on
the amounts and disclosures in the financial statements,
but where noncompliance may have a material effect on
the financial statements (e.g. environmental regulations).
AU-C Section 250
Required audit procedures:
Obtain an understanding of the clients legal and regulatory
framework.
Inquire of management about how the entity is complying.
Inspect correspondence with licensing and regulatory
authorities.
Determine compliance with laws and regulations that may
not have a direct effect on the amounts and disclosure but
may have a material effect on the financial statements.
AU-C Section 250

Higher Education Compliance Examples:

Tax
Higher Education Opportunity Act (Truth in Lending Act
Regulation Z)
Environmental Regulations
AU-C Section 250
What Changes for CPA Firms?
To help identify material misstatement of the financial
statements due to noncompliance with laws and
regulations, we will need to use our professional
judgment to determine the depth of review required.
Theres no standard check-off step!
We may have to expand the scope of documents we
review based on our analysis of the risks on a client by
client basis.
Evaluate the impact of the deeper dive on the audit
scope and pricing.
Getting CompliantA case study

We are compliantarent we???

Do you really know?


Our auditors are looking
Who else is concerned?
Originating Source of Requirement
Department of Ed
Accreditors
Scrutiny of Accreditors
Eg: New separate section for North
Central Association- HLC
The Board
Fiduciary Oversight/Risk Management
Our President
but he/she may not know it yet
Why is Denver Seminary putting more
emphasis on Compliance Monitoring?
Auditor Scrutiny
Accreditor Scrutiny
New Emphasis on Managing Risks
Changing regulatory environment
More to do and track
Cost of non-compliance
Staff Turnovera scary AHA moment
7 Elements of an
Effective Compliance Program1
1. High level personnel on board
Support implementation and effectiveness
Knowledgeable about content and operation of program
2. Establish clear compliance standards and procedures
3. Communicate - clearly and often
4. Training and Education
5. Internal compliance monitoring
6. Enforce standards through well-publicized disciplinary guidelines
7. Perform periodic risk assessment and environmental scanning

1
Federal Sentencing Guidelines Chapter 8 (Sentencing of Organizations)
Practical Considerations for Implementation

1. Get support from high level personnel


2. Assign a compliance officer and/or someone to chair the
compliance committee
3. Create a compliance coordination committee
4. Have a good method to document compliance
requirements
5. Assign responsibility!
6. Have a good method to track activities
Practical Considerations for Implementation
7. Deal with non-compliance
8. Monitor, update and modify as needed
9. Consider specialized training and education needed
10. Keep engagement at the top
What I did
Realized that if we wanted to Do Enterprise Risk
Management that compliance was a BIG part
Told my boss
Started filling out the matrix and identifying who was
doing what
Examined the CUA Annual Compliance Calendar
Created Departmental Calendars and
added other known requirements
Cross referenced with our
accreditors compliance checklist
Made sure the immediate needs were covered!
What I still need to do
Inform the President and Cabinet get buy in for next
steps
Form a Compliance Coordination Committee
Coordinate with responsible accreditation coordinator if
not on committee
Kick off the work of the committee
get buy in
Keep the momentum going!
Compliance Tools and Resources
http://www.higheredcompliance.org/
The Higher Education Compliance Alliance: Spearheaded by the NACUA, National
Association of College and University Attorneys, the Compliance Alliance is now
comprised of nearly 30 participating associations representing a broad cross-section
of higher education interests. These associations share a joint commitment to
providing high quality resources on a diverse range of compliance topics as a service
to the higher education community at large.

http://www.wlu.edu/general-counsel/answer-center/compliance-initiatives
Washington and Lee University Compliance Initiatives

http://counsel.cua.edu/
Campus Legal Information Clearinghouse: CLIC is a collaborative effort between the
American Council on Education (ACE) and The Catholic University of America's Office
of General Counsel. The University is especially grateful to ACE for its encouragement
and support of CLIC.
Compliance Tools and Resources
http://acua.org
The Association of College and University Auditors: Most resources require
membership, but section on internal audit under resources is free and informative.

Articles:

Developing and Implementing a Compliance Calendar and Other Tools, by Leanne


M. Shank and Justin H. Smith, Office of the General Counsel, Washington and Lee
University, NACUA.

Building a Compliance Program in Higher Education Institutions Without


Compliance Officers by Susan Keller, College & University Auditor, Spring 2009.
Compliance Tools
Compliance Matrix Higher Ed Areas of Compliance

AU C 250 Audit and Compliance checklist

Compliance Calendar(s)
Catholic University of America http
://counsel.cua.edu/thebasics/compliance.cfm
Denver Seminary Departmental Calendars
Conclusion
At their best, compliance programs can be educational and
enriching and can be used to help individuals and units do
their jobs for effectively. A positive focus on compliance can
promote an ethical, values-based environment that is
consistent with the mission of higher education.
- Jonathan Alger, President of James Madison University
Questions?

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