Association of
Government Accountants
The Central Kentucky Chapter
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November
2002 - Volume XXIV, Issue 7 |
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Association of
Government Accountants
The Central Kentucky Chapter
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November
2002 - Volume XXIV, Issue 7 |
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The President’s
Message
By Cindy Upton, President
Thanks to everyone who participated in our highly successful
training session last month! The Annual
Governmental Accounting and Auditing Update is one of the best chapter efforts
in the country. The discussion leaders,
Kinney 
Poynter and Betty King,
did their usual great job of bringing us up to date on the latest developments
in auditing and accounting and they let us have some fun too. Lee Ann Watters, our chapter education
director, did a fine job in making all the arrangements. And, once again, our good friend Arlene
Steuber took care of all the administrative stuff that drives normal people
crazy.
Our next major training event will be the regional Professional
Development Conference next May. I
encourage all of you to attend this conference, especially those of you who
were unable to attend the update in October.
Although the agenda is not finalized, a great deal of the training will
focus on performing audits of GASB 34 financial statements. More information will be available as the
Program Committee gets commitments from speakers.
Remember our monthly luncheon at the Office Pub & Deli. The speakers are good, the food is good, and
we have a good time. Please join us.
Chapter meeting notes
For October
By Linda Sagraves
Ed Hatchett, Kentucky's 44th
Auditor of Public Accounts, and BJ Bellamy, Chief Information Officer in the Office of
the Auditor of Public Accounts, spoke at the October
meeting.
Mr. Hatchett said the three most
important things that have occurred during his tenure as state auditor are (1)
the creation of an APA website and posting of all publicly issued audit
reports, (2) the introduction of performance auditing, and (3) the purchase of
computer hardware and software and a strong commitment to information technology.
As chief information officer,
BJ Bellamy is responsible for assessing the risk that data in the
Commonwealth’s computer systems can be compromised. BJ noted that the highest
number of malicious attacks ever was reported during September 2002. High-tech
financial service providers such as banks and credit unions and power and
energy companies continue to show the highest rates of attack activity (Rip
Tech, Inc., Volume II July 2002).
Many decision makers quote
clichés, such as, “we don’t have anything a hacker would want” rather than
implementing adequate controls to secure their computer systems. Hackers are
not only after files and financial data, they want free disk space, processing
power, anonymous access, personal information to commit identity theft, and
material for blackmail. Financial gain, bragging rights, revenge, and
information warfare motivate attackers. Companies in the Middle East and
Pacific Rim will go to great lengths to obtain corporate information for
competition and hacktavism. Hacktavism occurs when special interest groups,
such as environmentalists, attack their opponents by manipulating or changing
pertinent information.
Firewalls provide some
protection for computer systems, but they are not full proof. There are several
ways hackers can go around firewalls.
One way is through wireless technology. The hacker has to be in close
proximity to the wireless system to gain access. Depending on the wireless
system, close proximity could be a parking lot across the street. From remote
locations, attackers can gain control of various systems or peruse the
Internet. The weaknesses identified
through using wireless technology concern auditors and accountants.
The computers we use at home are just as vulnerable as the
computers used in the office. To protect your home computer, purchase antivirus
and firewall software and update the programs regularly.
Should auditors have discovered the problems?
By Tom Crouch, CPA, CIA, CISA, and Attorney and Otis
Singleton, CPA
When
accounting problems are discovered, they may be as large as an Enron-type
fiasco or they may be minor errors.
People often say that the auditors should have discovered the
problems. Is such a broad assumption on
target?
A
financial statement audit has stated objectives and auditors render an opinion
related to those objectives. It is
highly unlikely that the audit opinion will ever say that the auditors are
providing 100% assurance. The audit
opinion generally provides a 95% statistical assurance level that the stated
objectives were met.
There
is no such thing as 100% assurance regarding the accuracy of financial figures,
effectiveness of internal controls, or compliance with laws and regulations. In
order for auditors to provide 100% assurance, they would have to review every
transaction for the entity. Even if
auditors examined 100% of the supporting documentation for all transactions of
an entity, there is a risk that the entity's records have been falsified,
causing the subject matter to be misstated. Auditors are responsible for
identifying fraud when it is material to the financial statements. Usually
fraud is not material to financial statements, and if a fraud is carried out,
it is difficult to identify, especially if there is collusion among several
employees.
The
staffing levels for even 99% assurance audits might need to be more than double
the staffing levels for the 95% assurance audits normally conducted. The audit
staffing level would need to increase exponentially to move from 99% to 100%
assurance. The auditors would be moving
from cost effective auditing to a point where the auditors’ cost would be
overwhelming. The law of diminishing
returns does apply to audit efforts.
Auditors
cannot and do not provide 100% assurance about the financial figures, internal
control, and compliance. The entity
paying for the audit probably could not pay the audit cost for 100% assurance. In fact, it might be nearly impossible to
find any entity willing to provide the additional funds for 100% assurance
audits.
Even
if funding were available, most auditors would wonder whether the needed audit
staffing level could be achieved for such detailed audits. The turnover rate among the auditors
assigned to a 100% assurance audit might skyrocket due to the repetitive nature
of the very detailed work required to meet the desired assurance level.
If
funding, audit staffing levels, and turnover rates could be overcome, an audit
group would face another major problem.
The detailed and comprehensive audit work would be very time consuming
and very disruptive to the normal business operations of the audit client. The audit client probably would exert
pressure to reduce or stop the disruptions.
Even
if the 100% assurance obstacles could be overcome, the level of cooperation by
the audit client would drop. The audit
group probably would not be able to complete the assigned audit work in a
timely manner. Timely and cost
effective audits provide management and investors with the best audit value.
Should auditors have discovered the problems? “Yes,” when the problems were material to
financial statements. If the problems
were not material to the financial statements, the answer is usually “No,”
unless the problems discovered are clearly contrary to the audit opinion
rendered.
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This text may be forwarded via fax or
e-mail. This text may be republished in any professional publication or web
site.
Gaining recognition for the
CGFM certification within Kentucky
In a world of tight
budgets, deficit spending, and staff cutbacks, the CGFM designation places you
on the cutting edge when entering the job market. As a CGFM certificate holder, you may not be recognized through a
direct pay incentive, but you may be eligible for a job promotion, monetary
awards, or able to substitute one year of professional experience when applying
for a job.
CGFM recognition
requires the support and approval of top management, chapter officers, regional
and national CGFM coordinators, and the state legislature, as well as
networking with state and local government human resources departments and
colleagues who have succeeded in gaining the recognition.
In
a competitive job market, a CGFM recognition program would be a great way for
state and local government agencies to reward employees who have earned the
certification.
Washington, Idaho,
Virginia, Tennessee and Contra Costa County, CA already recognize the CGFM
designation either as a preferred hiring qualification, a substitute for
professional experience, or a requirement for a pay incentive. To get a CGFM certification program started
in Kentucky, the CGFM designation must be posted as a preferred qualification
in all job listings for government financial management positions.
For
additional guidance on getting a CGFM recognition program started in Kentucky,
contact the CKY Chapter CGFM coordinator, Jonathon Smith (Jonathan.Smith@mail.state.ky.us),
Virginia Brizendine (vbrizendine@ohsers.org), the 2002 National
Chairman, or Joan Schwartz (jschwartz@agacgfm.org).
It
can be done and you can be part of a chapter team that succeeds!
Turkey
Trivia: Fun Facts About America's Favorite Bird
A long-time centerpiece of American holiday feasts, the
turkey has a colorful and delicious history. Here are some intriguing facts
about our nation's favorite bird:
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Turkeys originated in North and Central America, and evidence indicates that
they have been around for over 10 million years.
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Until 1863, Thanksgiving Day had not been celebrated annually since the first
feast in 1621. This changed in 1863 when Sarah Josepha Hale encouraged Abraham
Lincoln to set aside the last Thursday in November "as a day for national
thanksgiving and prayer."
- In
Mexico, the turkey was considered a sacrificial bird.
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Domesticated turkeys (farm raised) cannot fly. Wild turkeys can fly for short
distances at up to 55 miles per hour. Wild turkeys are also fast on the ground,
running at speeds of up to 25 miles per hour.
- Only male turkeys (toms) gobble.
Females (hens) make a clicking noise. The gobble is a seasonal call during the
spring and fall. Hens are attracted for mating when a tom gobbles. Wild toms
love to gobble when they hear loud sounds or settle in for the night.
- The
heaviest turkey ever raised weighed in at 86 pounds -- about the size of a
large German Shepherd -- and was grown in England, according to Dr. Sarah
Birkhold, poultry specialist with the Texas Agricultural Extension Service.
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Mature turkeys have 3,500 or so feathers. The Apache Indians considered the
turkey timid and wouldn't eat it or use its feathers on their arrows.
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More than 45 million turkeys are cooked and 525 million pounds of turkey are
eaten during Thanksgiving.
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Ninety percent of American homes eat turkey on Thanksgiving Day. Fifty percent
eat turkey on Christmas.
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North Carolina produces 61 million turkeys annually, more than any other state.
Minnesota and Arkansas are number two and three.
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Benjamin Franklin, the great American statesman, thought the turkey was so
American it should have been chosen as our national symbol rather than the
eagle.
- The
fleshy growth from the base of the beak, which is very long on male turkeys and
hangs down over the beak, is called the snood.
Source:
www.baltimoremd.com
Of the Central Kentucky Chapter
For the month ending September 30, 2002
By
Rick Waddle, Treasurer
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Central Account |
Education
Account |
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Beginning Bank Balance
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3,874.27 |
Beginning Bank
Balance |
$500.00 |
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Revenue: |
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Revenue: |
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Dues for June-August 2002
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75.00 |
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Interest |
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3.11 |
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Total Revenue |
78.11 |
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Expenses: |
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Expense: |
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USPS-Postage |
68.00 |
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Curtis Trophy-speaker gifts |
162.70 |
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Total Expenses |
230.70 |
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Ending Bank Balance |
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3,721.68 |
Ending Bank
Balance |
$500.00 |
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A Thanksgiving Prayer
By Samuel F. Pugh
"O God, when I have food, help me to remember the hungry; When
I have work, help me to remember the jobless; when I have a home, help me to
remember those who have no home at all; when I am without pain, help me to
remember those who suffer, and remembering, help me to destroy my complacency;
bestir my compassion, and be concerned enough to help; by word and deed, those
who cry out for what we take for granted. Amen."
Chapter Executive Committee
Office CEC Officers E-mail Address Phone President Cindy Upton (502) 564-8100 President-Elect Roy Hunter (502) 695-1040 Past President Phil Nally (502) 564-7750 Secretary Mary Montgomery (502) 573-0050 Treasurer Rick Waddle (502) 564-7750 Program Coordinator Margaret Hurst (502) 564-8100 Education/Training Lee Ann Watters (502) 695-1040 Newsletter Editor Jennifer Harper (502) 573-0050 Historian Linda Sagraves (502) 573-0050 Community Service Rex Gregory (502) 564-7334 Attendance Don Fields (502) 564-7334 Membership Coordinator Amy Small (502) 573-0050 CGFM Coordinator Jonathan Smith (502) 564-2532 Website Development Coordinator Dan Flaherty (502) 564-8890 (502) 291-3889 Central Kentucky AGA Website
