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USAS AUD_4502 Report

Historical Overview

I’m not certain exactly when the original 4502 report program was written, only that it was pre-1986. At that time, reporting to AOS was done on a calendar year basis, while reporting to ODE was done on a fiscal year basis via the 625 report. In 1986, the school’s fiscal year was changed to July1-June 30, and the AUD_4502 report as we know it today was born. The new required format was a joint effort by AOS and ODE to consolidate the information collected by the 4502 and 625 reports. As for the software, much of the older 4502 program was retained and reworked/combined into the program we know today. Thus, almost all of the code used to generate these reports is somewhere between 24 to 30 years old.

Beginning in 1991 and phased in through the next several years, AOS mandated that districts begin preparing annual financial reports using generally accepted accounting principles, or GAAP, superceding the prior legal requirement for filing the 4502 report with AOS. The original “GAAP subsystem” was written in 1994 to assist with this process. Then in 2002, GASB34 came along and made significant changes to the format of the GAAP financial reports, and the Web-GAAP system, under the ownership of AOS, was written to support the new reporting format.

Meanwhile, the EMIS reporting requirements and EMIS system were also created in 1991. As part of the EMIS system, ODE began collecting detailed information about each budget, revenue, and cash account as part of the EMIS financial reporting.

Throughout all of this, the 4502 continued on. From about 1991 on, specifications were no longer available, and the SSDT struggled each year that coding changes were made to find someone willing to help define for us what these reports should look like.

Recent History

For fiscal year 2007, AOS made changes to the fund types, requiring fairly significant changes to the AUD-4502 report. AOS did assist the SSDT in determining how the new fund types should best be represented, but I believe that it was at this time that the long-term future of the 4502 report was first questioned.

Then, almost three years ago the SSDT was approached by AOS regarding the possibility of removing the 4502 program from the USAS software. With the legal requirement for reporting to AOS being the GAAP reports, there was no longer any legal requirement for a 4502 report, and hadn’t been for quite some time. And, with reporting to ODE taking place via EMIS, ODE was already collecting the detailed information they needed. The SSDT had begun our migration efforts to move the USAS software off of the OpenVMS platform and knew the 4502 would soon need to be rewritten from scratch. I believe AOS and ODE had a number of internal discussions on this along with discussions with the SSDT, after which it was determined that the 4502 report should be removed and replaced with cash-basis reports generated from the Web-GAAP system. AOS presented this at their regional meetings. Feedback was also solicited from districts via the Software Advisory Committee representatives, which indicated that the primary uses of the 4502 were for the audit process, for creation of the OCBOA reports, for the Indirect Costs, and for bond ratings.

An important part of the change was that the AOS decided to make reports similar to many of the 4502 exhibits and statements available from within the Web-GAAP system (eventually called the Legacy Cash Reports), using the cash information loaded in via the GAAP_EXP file extracted from USAS or other systems. This was done as a convenience for districts that still wanted or needed to generate some of these reports, and for districts or CPA firms who utilize the cash-basis information to create the GAAP or OCBOA reports. It was our understanding that these reports would be able to be used instead of the 4502 reports for all of the uses mentioned above. The cash-basis information is the starting point for building the GAAP reports, so it made sense for the cash-basis reports to be included here alongside the GAAP reports. This also allowed the same "rules" to be applied to the cash-basis reports and allowed easily keeping the two sets of reports in sync with each other. All the necessary information was already built into the more modern Web-GAAP, so it was a very easy process to generate the cash-basis reports from within this system.

For fiscal year 2009, the 4502 report was removed from the fiscal year-end closing process, but was retained in the USAS system under the name OLD_4502. While it was believed that the cash-basis reports from Web-GAAP would cover all of the needs indicated, there were no changes needed to 4502 last year and it was decided to keep the OLD_4502 as a safety precaution “just in case”. Information on this was disseminated to ITC’s and also via the public forum. The SSDT asked that districts attempt to use the Legacy Cash reports as a replacement for anything they used the 4502 for and report any issues to us so that we could adjust as needed for fiscal year 2010, either in the web-GAAP reports or in USAS. As far as I recall, the lack of a web-GAAP alternative for Statement S was the only feedback received. On a local level, we worked with many of our NWOCA districts and were able to successfully use the Legacy Cash Reports as a replacement for the 4502 for their auditors and cpa firms. On a state level, the SSDT web-GAAP team also worked with a number of districts, assisting them with generating the new reports.

Where We Are Today

The 4502 report was removed from USAS for the May 2010 software release. Furthermore, it has not been updated to include the new functions and objects added to USAS for fiscal year 2010. Without these updates, the program will kick out all of these codes as invalid accounts and will not generate a report. In fact, each time that any new codes are added, each individual affected exhibit and statement in the 4502 has to have numerous manual updates, manual paging adjustments, etc., due to the age of the program and the way this program was written back in the 80’s.

More generally, the SSDT’s primary focus today is on the 2nd phase of the USAS migration, rewriting the “back end” of USAS to use a SQL database. You can read more on this in the blog State of the USAS Address. USPS also anticipates beginning its second phase soon as well. In order to focus on these development efforts, many desired software enhancements have been put on hold until after the rewrite is complete.

Specific Issues/Concerns

In this section, I will attempt to address some of the specific comments and misconceptions that have been mentioned recently in regards to the removal of the 4502 program from USAS.

“the reason that AOS is doing away with the 4502 is to discourage those that have decided to not convert to GAAP” – I have no idea where this idea came from. I never got this impression at all from any of my discussions with AOS or ODE. I believe the idea was to get the cash-basis financial reports more “up-to-date” with current reporting standards, and it was more efficient to do this from web-GAAP than to rewrite all of the exhibits/statements in current USAS. I am definitely not an expert on OCBOA, but it was my understanding that the Legacy Cash Reports would make it easier to create OCBOA reports, not discourage it. The Legacy Cash Reports are cash-basis reports, prior to any accruals being done, already presented in a GAAP-like format similar to what is needed for OCBOA. There is no need to do any accruals or convert to a GAAP basis in order to use the Legacy Cash Reports, and they are available to everyone.

There seems to also be a misconception by some that because we are asking districts to use the web-GAAP system that you are being asked to report on a GAAP basis. This is not the case. None of these changes affect previous guidance that AOS has put out regarding cash-basis reporting. The web-GAAP system is generating cash-basis reports, without any of the accruals and adjustments that would need to be made to report under GAAP.

Several mentioned that School Districts use the 4502 to complete Indirect Costs. It is true that Statements P and Q have been requested in the past for completing this. However, the SSDT has been in touch with Tracy Knowles and Brian Jones from the Office of Federal and State Grants Management regarding the Indirect Cost reporting. We sent them samples and they are fine with the Legacy Cash report replacements for Statement P and Q. We also sent samples to OMAC and they were okay with the new reports as well.

Some mentioned they use the 4502 each month for the bank reconciliation. This module is still available in USAS, it is now part of the USAEMSEDT program.

Some also mentioned they need the Statement S. While there is no one specific Legacy Cash Replacement report for Statement S, this was discussed with AOS and recommendations were posted to use either the Statement of Activities if reporting under GAAP, or a combination of the Legacy Cash Reports (for Governmental, Proprietary, and Fiduciary fund types) if reporting on a cash basis as a replacement for Statement S (see http://forums.oecn.k12.oh.us/forums/oecn/dispatch.cgi/usas/docProfile/102206/2568492. This one is difficult to implement in web-GAAP due to the manner in which it combines different presentation formats for each of the fund type groupings into a single report format.

“by doing away with the 4502, districts will have another added hardship in trying to gather information for various requests.” – We believe that the Legacy Cash Reports will supply the information needed, but if you do find something that is a hardship to gather then we definitely want to know about it, and we will try our best to find a way to address it. While the initial setup of web-GAAP to get the cash basis reports does take a little time the first year, the effort involved in subsequent years should be minimal as most of the setup carries through from year to year. And, most of this setup such as mapping of funds is not necessary at all if you are only running the Statement P and Q replacements for Indirect Costs. Most of the setup is only necessary if running the other replacements for Exhibit 2 & 3 and Statements A-H.

“As you know Web-GAAP provides users the flexibility to “Map” funds from USAS Fund Type to another Fund Type for GAAP purposes. The Legacy Reports are in the GAAP Fund Type not USAS Fund Type which does not allow for apples to apples comparison from School District to School District.” – This is an apparent misconception with how the USAS 4502 report worked. The 4502 report used the ‘fund type’ from CASHSCN to categorize the funds. This ‘fund type’ was supposed to be the “mapped fund type” as the fund was used, so that the 4502 would match the GAAP reports. I’m not sure I understand what is being compared from school district to school district, or who it is that has access to these reports that would be doing these comparisons, but if this is being done then it is already not comparable if districts are not using this consistently. It seems to me that using the “mapped” fund type indicating how the fund is actually used would make it more comparable, not less.

There was a concern mentioned that the Legacy Reports do not provide the detail by Fund Number and Fund/SPCC Number. How these appear actually depend on how you set up the mappings in web-GAAP. You can get detail by fund/scc if you do not map the scc’s together. The most typical GAAP-like format usually does map these together into one column for the fund, but that is not the only way the reports can be run.

Many questioned why the 4502 couldn’t be just left out there as an optional report. The 4502 is very complex, consisting of numerous different reports which all need to be kept up-to-date. It requires considerable maintenance effort each year that account dimension changes are made. So it is not as simple as just leaving it sit out there. We would prefer to look at what the needs actually are, and see if we can find a more effective way to address them for the long term.

What are the Specific Needs?

Hopefully the above has helped to explain the history and reasons for rewriting the 4502 reports into web-GAAP. The SSDT wants to continue to meet the needs of districts, while continuing to evolve the software into the present day. It is not desirable for the 4502 program to continue to be updated, due to its age and high maintenance costs. Maybe this means that we need to write a new report to replacement "Statement S", or maybe we need to make updates to existing USAS reports to accomodate what is needed. Either way, the first step is going to need to be to identify which needs are NOT addressed by the Legacy Cash Reports replacements already created.

If you’ve not actually tried the Legacy Cash Reports, I would encourage you to try them out, or ask your ITC for a demonstration or sample of the reports. Instructions are available at Legacy Cash Reports. If you then have specific needs not met by these reports, we would encourage you to make us aware of these so we can research and get these needs addressed.