Molly Viola, assistant vice president for financial operations and controller for the University of Minnesota, presented the audit and compliance committee with an overview of the annual financial statement review process, including a draft distribution date, review guidance and reporting timelines.

Viola said the committee will receive a draft of the annual financial statements on Oct. 22 to review for consistency with information members have seen or acted on in their roles. "On October 22, you will receive a draft annual financial statement for your review," she said.

The draft will include three major sections: the management's discussion and analysis (MD&A), the core financial statements and the footnotes, Viola said. "Typically [the MD&A] is about 10 to 15 pages," she said. The core statements will show the university’s statements of net position, statements of revenues, expenses and changes in net position, and a statement of cash flows. Viola identified the University of Minnesota Physicians and the University of Minnesota Foundation as significant component units; the transcript also referenced "Remenco" as included in the core materials.

Viola said the footnotes are typically 55 to 60 pages and that this year the team expects 16 footnotes. She noted that the footnote disclosures are required by the Governmental Accounting Standards Board. "The footnotes provide the reader with additional information about specific types of financial transactions," she said.

She described the committee's adoption of best practices modeled on the spirit of federal corporate rules while noting limits of applicability. "The Sarbanes-Oxley Act of 2002 does not apply or govern to the University of Minnesota, the Board of Regents, or the audit committee," Viola said, adding that the board had asked staff to identify and adopt best practices consistent with the act's spirit. Those best practices are memorialized in the Board of Regents policy on board operations and agenda guidelines; Viola cited section 4, subdivision 6(c), which directs the audit and compliance committee to review proposed formats and wordings of the annual financial report, including the MD&A, financial statements, footnotes, statistics and disclosures, before final issuance.

Viola asked committee members to send questions or comments before an Oct. 27 meeting of the committee chair and vice chair, when staff will discuss feedback and confirm whether the report is ready to finalize. She said external auditors CliftonLarsonAllen expected to sign off on the report by Wednesday, Oct. 29, and that the finalized annual report will be provided to the state of Minnesota and released publicly. "Clifton Larson Allen plans to sign off on the annual report by Wednesday, October 29," she said.

Viola noted some items may change as auditors complete procedures but said material changes were not anticipated; any substantive changes will be summarized and shared with the committee. The finalized report and the auditors' required communications will be discussed with the audit and compliance committee at the December meeting; the annual report will also be an informational item for the financial operations committee.

Viola concluded by providing contacts for questions in the review period, naming Regent Verhalen and Lori Stanifer, director of accounting services, in addition to herself. "Please plan on providing questions or comments about the report directly to Regent Verhalen, Lori Stanifer, our director of accounting services, or myself anytime prior to our meeting with the committee chair and vice chair," she said.