Finance 101. Learning Outcomes

Transcription

1 Finance Learning Outcomes Define funds and review the fund structure of a government Identify the components of fund financial statements Know how fund balance is generated and what it should be used for Identify the laws affecting budget preparation and adoption Recognize the process of preparing, adopting and administering a budget Recall methods of budget communication Recite annual audit and financial reporting requirements 2 1

2 Accounting 3 GASB AND GAAP The Governmental Accounting Standards Board (GASB) is the standard-setting body for state and local governments Generally Accepted Accounting Principles are conventions, rules, and procedures that serve as the norm for the fair presentation of financial statements 4 2

3 What is a Fund? Separate accounting entity Separate set of self-balancing accounts Separate set of financial statements Three categories of funds 5 Minimum Number of Funds Establish the minimum number of funds in order to Comply with laws Exercise sound financial administration 6 3

4 Fund Accounting Fund Categories Reporting Entity Business Type Activities Governmental Funds Proprietary Funds Fiduciary Funds Most government functions financed Do not belong to government just holding for another external party and cannot be used for governments own programs 7 Governmental Funds Generic Fund Types E-911, Law Library, Hotel/Motel Confiscated Assets Governmental Funds GO Bonds, SPLOST General Fund Special Revenue Funds Capital Project Funds Debt Service Funds Permanent Funds 8 4

5 Proprietary Funds Generic Fund Types Proprietary Water/Sewer, Electric, Gas, Cable, Solid Waste, Mass Transit, Civic Center Enterprise Funds Internal Service Funds 9 Fiduciary Funds Generic Fund Types Court Fees Fiduciary Funds Agency Funds Investment Trust Funds Pension Trust Funds Private Purpose Trust Funds 10 5

6 Uniform Chart of Accounts _3rdEdition_DCA_Approved_ pdf 11 TYPES of financial statements Statements of Position Operating Statements 12 6

7 Balance Sheet Statements of Position Statement of Net Position 13 Balance Sheet Governmental Funds Balance Sheet Page A-1 Current Assets Deferred Outflows Current Liabilities Deferred Inflows 14 7

8 Balance Sheet Governmental Funds Balance Sheet A-1 Equity 15 Balance Sheet Governmental Funds Focus on ability to pay the government s bills Near-term cash inflows and outflows Does NOT include capital assets Does NOT include long term debt 16 8

9 Statement of Net Position Proprietary Funds Focus on economic perspective of government BOTH current and non-current assets and current and non-current liabilities Includes Capital Assets Includes Long Term Debt 17 Statement of Net Position Proprietary Funds Proprietary Funds Page A-3 Current Assets Noncurrent Assets 18 9

10 Statement of Net Position Proprietary Funds Current Liabilities Noncurrent Liabilities 19 Revenues Operating Statement Expenditures/Expenses 20 10

11 Governmental Fund Operating Statement Page A-2 21 Governmental Fund Operating Statement 22 11

12 Governmental Fund Operating Statement 23 Proprietary Funds Page A

13 Relationship Operating Statement to Balance Sheet Ending fund balance operating statement = ending fund balance on balance sheet 25 Internal Report Name of Government Date Property Tax Sales Tax Charges for Services Other Revenues Total Expenditures General Government Police Parks/Rec Total Expenditures Revenues Budgeted Actual Encumbrances Variance Excess Revenues Over/(Under) Expenditures Beginning Fund Balance Ending Fund Balance 26 13

14 Review Review For reporting purposes, governments classify their individual funds within three categories - A. Governmental, Proprietary, and Fiduciary B. General, Special, and Debt Service C. Governmental, Enterprise, and Fiduciary D. None of the above 28 14

15 Review For reporting purposes, governments classify their individual funds within three categories - A. Governmental, Proprietary, and Fiduciary B. General, Special, and Debt Service C. Governmental, Enterprise, and Fiduciary D. None of the above 29 Review The five generic governmental funds are G S R C P D S P 30 15

16 Review The five generic governmental funds are General Special Revenue Capital Projects Debt Service Permanent 31 Review The two generic proprietary funds are E I S 32 16

17 Review The two generic proprietary funds are Enterprise Internal Service 33 Review The four generic fiduciary funds are P P T P T I T A 34 17

18 Review The four generic fiduciary funds are Private Purpose Trust Pension Trust Investment Trust Agency 35 Fund Balance 36 18

19 What is Fund Balance? Equity in Governmental funds Revenue increases fund balance and expenditures decrease fund balance 37 Is Fund Balance Equal to Cash and Investments? 38 19

20 Is Fund Balance Equal to Cash and Investments? Cash and investments are a part of fund balance Other parts of fund balance include amounts owed to your government, cash value of inventory and other assets 39 Governmental Fund Equity Net Current Assets or Fund Balance Calculated as follows: Current Assets & Deferred Outflows Current Liabilities & Deferred Inflows Fund Balance 40 20

21 How the Fund Balance Evolved - Year 1 Net result of the difference between revenues and expenditures from the inception of the government Revenues $ 100,000 Expenditures $ 90,000 Net Revenue $ 10, How the Fund Balance Evolved Year 2 Revenues $ 110,000 Expenditures $ 95,000 Net Revenue $ 15,000 Fund Balance Year 1 $ 10,000 Fund Balance Year 2 $ 25,

22 How the Fund Balance Evolved Year 3 Revenues $ 97,000 Expenditures $ 100,000 Net Revenue $ -3,000 Fund Balance Year 2 $ 25,000 Fund Balance Year 3 $ 22, Use of Fund Balance The fund balance should be used for One-time expenditures Unexpected events 44 22

23 Available Fund Balance The entire Fund Balance may not be available to fund deficiency of revenues and expenditures 45 Fund Balance 5 Categories Nonspendable Inventory Advances to Permanent fund principal Restricted Debt Covenant Enabling Legislation Committed Formal Board Action to commit or decommit Unassigned What s left Assigned Intent Not restricted or committed 46 23

24 Fund Balance Fund Balance Nonspendable $100,000 Restricted $250,000 Committed $175,000 Assigned $ 25,000 Unassigned $133,000 Total Fund Balance $683, Unrestricted Fund Balance Unrestricted Committed Assigned Unassigned Maintain balance sufficient to manage risk of revenue fluctuations and unexpected expenditures 48 24

25 What is the Right Amount of Unassigned Fund Balance? Unique to each government Government Finance Officers Recommends 2 months of General Fund operating revenues or expenditures 49 Where Do You Stand? Unassigned Fund Balance as a % of General Fund operating revenues: Calculated as follows: Unassigned Fund Balance /General Fund Revenues = % 50 25

26 Sample Calculation Step 1 Identify Unassigned Fund Balance Governmental Funds Balance Sheet 51 Sample Calculation Step 2 Identify Total Revenues for the General Fund

27 Sample Calculation Step 3 Perform the following calculation- General Fund Unassigned Fund Balance $ 4,815,949 Total General Fund Revenues $ 34,620,817 Unassigned Fund Balance as a % of Revenues 13.91% 53 Fund Balance vs. Contingency Fund Balance and Contingency are not the same The law is silent on how much contingency to budget Amounts are not charged to the contingency line item budgetary only Budget adjustments are necessary to move contingency to appropriate account for spending 54 27

28 Review 55 Review Fund Balance is defined as the difference between current assets & deferred outflows of resources and current liabilities & deferred inflows of resources. True or False 56 28

29 Review Fund Balance is defined as the difference between current assets & deferred outflows of resources and current liabilities & deferred inflows of resources. True or False 57 Review Georgia Law requires governments to budget a contingency in an amount no less than 3% and no greater than 5%. True or False 58 29

30 Review Georgia Law requires governments to budget a contingency in an amount no less than 3% and no greater than 5%. True or False 59 Review Ending fund balance on the operating statement must equal ending fund balance on the balance sheet. True or False 60 30

31 Review Ending fund balance on the operating statement must equal ending fund balance on the balance sheet. True or False 61 Review General Fund Balance categories include the following- A. Nonspendable B. Restricted C. Committed D. Assigned E. Unassigned F. All of the above 62 31

32 Review General Fund Balance categories include the following- A. Nonspendable B. Restricted C. Committed D. Assigned E. Unassigned F. All of the above 63 Review What is the minimum fund balance reserve recommended by the Government Finance Officers Association? A. 12 months B. 6 months C. 3 months D. 2 months 64 32

33 Review What is the minimum fund balance reserve recommended by the Government Finance Officers Association? A. 12 months B. 6 months C. 3 months D. 2 months 65 Budget and Other Laws 66 33

34 O. C. G. A. Official Code of Georgia Annotated 67 Budget Law On-Line 68 34

35 pliance-auditing-publication.html 69 What Governs the Budget? Georgia Budget Law and Policy Official Code of Georgia Annotated (O.C.G.A) Sections to Local Charters Financial Policies 70 35

36 O.C.G.A Balanced Budget Estimated Revenue Sources + Fund Balances = Appropriations General Fund Special Revenue Fund Debt Service Fund Capital Projects Project-length balanced budget 71 O.C.G.A Option to adopt budgets for any remaining funds Adopt by ordinance or resolution 72 36

37 Balanced or Unbalanced? Example 1 Revenues $ 100,000 Expenditures $ 100,000 Difference $ - 73 Balanced or Unbalanced? Example 2 Revenues $ 100,000 Expenditures $ 110,000 Difference $ (10,000) 74 37

38 Balanced or Unbalanced? Example 3 Revenues $ 110,000 Expenditures $ 100,000 Difference $ 10, Balanced or Unbalanced? Example 4 Revenues $ 80,000 Fund Balance $ 20,000 Expenditures $ 100,000 Difference $

39 Sample Budget Resolution See Sample Resolution Page A-7/A-8 77 Budget Amendments Changes to original budget require ordinance or resolution Increase in appropriation legal level of control Change in revenues Transfer of appropriations between departments 78 39

40 Budget Communication O.C.G.A Citizens must have access to the budget document same day as it is made available to governing authority Advertise budget availability in newspaper during week budget is made available to governing authority as well as date of hearing for public comment. Must be easily identified CANNOT be placed with legal ads 79 Budget Communication O.C.G.A At least one week before budget resolution or ordinance is voted on, a public hearing must be held. Advertisement of the hearing date and time must occur one week prior to the hearing. See Sample Public Hearing Advertisement (Page A-9)

41 Electronic Reports Submission O. C. G. A Requirement to post documents to Carl Vinson Institute of Government website for governments with budget exceeding $1 million PDF of approved budget must be posted within 30 calendar days of adoption by ordinance or resolution PDF of completed audit must be posted as soon as practicable (also must submit to Department of Audits) 81 Electronic Reports Submission O. C. G. A Report of Forfeited Assets required by O.C.G.A must be submitted to the Vinson Institute as soon as practicable 82 41

42 83 O.C.G.A Requirement to post on the government s website federally issued user ID # and date of authorization used to determine employment eligibility of workers If government does not have a website, must post to Carl Vinson Institute of Government website 84 42

43 E-Verify Posting 85 Property Taxes O.C.G.A Must publish in newspaper one week before establishment of millage rates assessed taxable value of all property, by class and in total proposed millage rate total ad valorem taxes to be levied 86 43

44 Property Taxes O.C.G.A Must be published for the current year and the preceding five years See Sample on Page A-6 Must include date and time of meeting in which millage will be adopted 87 Advertisement

45 Review 89 Review By law, governments are required to adopt and operate under an annual balanced budget for the - A. General fund, each special revenue fund and each debt service fund B. All funds C. Only the general fund D. None of the above 90 45

46 Review By law, governments are required to adopt and operate under an annual balanced budget for the - A. General fund, each special revenue fund and each debt service fund B. All funds C. Only the general fund D. None of the above 91 Review Georgia law states that governments are required to adopt and operate under a project-length balanced budget for - A. All funds B. The general fund C. Each capital project fund D. The general fund, special revenue fund and each debt service fund 92 46

47 Review Georgia law states that governments are required to adopt and operate under a project-length balanced budget for - A. All funds B. The general fund C. Each capital project fund D. The general fund, special revenue fund and each debt service fund 93 Review A budget ordinance or resolution is balanced when A. Assets minus liabilities equal fund balance B. Credits equal debits C. The sum of estimated revenues and appropriated fund balances is equal to appropriations D. Expenses/expenditures equal appropriations 94 47

48 Review A budget ordinance or resolution is balanced when A. Assets minus liabilities equal fund balance B. Credits equal debits C. The sum of estimated revenues and appropriated fund balances is equal to appropriations D. Expenses/expenditures equal appropriations 95 Budget Process Overview 96 48

49 Purpose of a Budget Tool for financial management Plan for providing services Tool for communicating to the public Fiscal and management policies How services are to be funded Priorities for services delivered 97 Budget Process Overview The budget process influences Political goals and objectives Maintain services without increasing taxes Departmental revenue and staffing limitations Mandated programs and services Changes to service levels Increase parks/recreation services Increase fire and police 98 49

50 Budget Process Overview Process centers around start of fiscal year Budget calendar sets a timeline to ensure budget is adopted before beginning of fiscal year Deadlines for departments to submit information Dates for advertising and hearings Governing Authority Review and Adoption 99 Budget Calendar

51 Budget Process Overview The Budget Officer Develops and distributes budget forms and instructions to departments Compiles all information submitted into a single document Estimates revenues; combines with departmental expenditures Meets with government s chief executive regarding changes 101 Budget Process Overview The governing body Sets priorities for the upcoming year Reviews proposed budget Asks questions about increases and decreases and recommended allocation of resources

52 Budget Process Revenues Common Revenue Sources Property taxes Title ad valorem taxes Insurance premium taxes Sales taxes Franchise fees Beer and wine license and excise taxes 103 Budget Process Revenues Common Revenue Sources Business licenses Building permits Fines and forfeitures Intergovernmental revenues

53 Revenue Projection Requires knowledge of Present and past conditions Government s financial condition Good judgment 105 Revenue Projection Property taxes estimated by using tax digest information Sales tax current economic condition Be conservative Better to be too low than too high

54 Budget Process Revenue Basic Considerations Acceptability Will the tax fairly impact those affected? Example sales tax Stability Will tax collections remain stable in times of economic fluctuations? 107 Budget Process Revenue Basic Considerations Self-sufficiency avoid becoming dependent on state or federal grants Cost efficiency providing the best quality of services in the most efficient manner

55 National Advisory Council on State and Local Budgeting (NACSLB) Recommended Budget Practices Revenue Recommended Practice Revenue Policy Understanding the revenue stream is essential to prudent planning. Most of these policies seek stability to avoid potential service disruptions caused by revenue shortfalls. At a minimum, jurisdictions should have policies that address: 1. Revenue Diversification A government should adopt a policy/policies that encourages a diversity of revenue sources in order to improve the ability to handle fluctuations in individual sources. (NACSLB Practice 4.6) 109 National Advisory Council on State and Local Budgeting (NACSLB) Recommended Budget Practices Revenue Recommended Practice Revenue Policy 2. Fees and Charges A government should adopt policy(s) that identify the manner in which fees and charges are set and the extent to which they cover the cost of the service provided. (NACSLB Practice 4.2) 3. Use of One-Time Revenues A government should adopt a policy(s) limiting the use of one-time revenues for ongoing expenditures. (NACSLB Practice 4.4) 4. Use of Unpredictable Revenues A government should adopt a policy(s) on the use of major revenue sources it considers unpredictable. (NACSLB Practice 4.4a)

56 111 Review

57 Review Revenues should be estimated on an objective and conservative basis. True or False 113 Review Revenues should be estimated on an objective and conservative basis. True or False

58 Review The four basic considerations when budgeting revenue A S S S C E 115 Review The four basic considerations when budgeting revenue Acceptability Stability Self Sufficiency Cost Efficiency

59 Review The Budget is A. Tool for financial management B. Plan for providing services C. Tool for communicating to the public D. All of the above 117 Review The Budget is A. Tool for financial management B. Plan for providing services C. Tool for communicating to the public D. All of the above

60 Property Tax Revenue 119 Property Taxes Oldest form of taxes levied in U.S. Primary revenue source for counties Once considered a stable revenue source

61 Property Taxes Real and personal property Real real estate, land and buildings Personal inventory, equipment of businesses, boats and motors, airplanes and financial system assets. Public utilities For the majority of governments, Georgia law requires that property be valued at the fair market value then taxed at an assessed value of 40% 121 Millage Rate Millage rate applied to the appraised value of a parcel of property and determines the tax due

62 Millage Rate Mill = $1 per $1,000 of assessed property value Expressed in terms of the following; 1/1000 of a dollar or x assessed value 123 Millage Rate Appraisal value $100,000 Assessed at 40% (state law) $40,000 Less exemptions -$10,000 Taxable value $30,000 $30,000 x 12.5 mills (county) $ (schools) $ (cities) $85 Total $1,

63 Determining the Correct Millage Property tax revenues cover the gap between the planned expenditures and forecasted revenues. Tax Rate = Amount Required Assessed Value 125 Determining the Correct Millage Estimated expenditures = $1,560,000 Estimated revenues = $1,420,000 Total assessed value = $10,000,000 Calculate the millage necessary to balance the budget

64 Determining the Correct Millage Estimated expenditures = $1,560,000 Estimated revenues = $1,420,000 Amount needed to balance the budget $140, Determining the Correct Millage Tax Rate = Amount Required / Assessed Value $140,000 10,000,

65 Determining the Correct Millage Tax Rate = Amount Required / Assessed Value $140,000 10,000,000 Millage required to cover the gap: O.C.G.A Taxpayer Bill of Rights In any year of revaluation, levying authorities must rollback millage rates to offset total increase of tax digest due to revaluation or advertise Notice of Property Tax Increase and hold three public hearings Tax Commissioner/Chief Appraiser computes rollback rate and certifies same to each levying authority

66 Taxpayer Bill of Rights Rollback rate means the previous year's millage rate minus the millage equivalent of the total net assessed value added by reassessments Rollback rate is computed by either Tax Commissioner or Tax Assessor on prescribed form from the DOR. Form must be submitted with digest 131 SEE Page A

67 Taxpayer Bill of Rights Essentially, any inflationary increase in the digest must be offset by a rollback of the millage rate, or public hearings must be held and additional newspaper ad must be run In instances in which there is no revaluation, if millage rates are increased, the public hearing requirement may apply 133 Advertisement

68 Review 135 Review For the majority of governments, Georgia law requires that property be valued at the fair market value then taxed at an assessed value of - A. 30% B. 35% C. 40% D. 45%

69 Review For the majority of governments, Georgia law requires that property be valued at the fair market value then taxed at an assessed value of - A. 30% B. 35% C. 40% D. 45% 137 Review One mill of tax is equivalent to $1 per thousand of taxable assessed value. True or False

70 Review One mill of tax is equivalent to $1 per thousand of taxable assessed value. True or False 139 Review For a government that has a net taxable digest of $2,093,130,182, the value of one mill of tax would be equivalent to - A. $209,313,000 B. $2,093,130 C. $209,313 D. None of the above are correct

71 Review For a government that has a net taxable digest of $2,093,130,182, the value of one mill of tax would be equivalent to - A. $209,313,000 B. $2,093,130 C. $209,313 D. None of the above are correct 141 Review If a governing authority levies a millage rate that is greater than the roll back rate they must hold hearings to comply with the Tax Payer Bill of Rights. A. One B. Two C. Three D. Four

72 Review If a governing authority levies a millage rate that is greater than the roll back rate they must hold hearings to comply with the Tax Payer Bill of Rights. A. One B. Two C. Three D. Four 143 Review weeks prior to setting the millage rate, Georgia governments are required to advertise, in the legal organ of their jurisdiction, the current year tax levy and five year history of the tax levy. A. One B. Two C. Three D. Four

73 Review weeks prior to setting the millage rate, Georgia governments are required to advertise, in the legal organ of their jurisdiction, the current year tax levy and five year history of the tax levy. A. One B. Two C. Three D. Four 145 EXPENDITURES

74 Line Item Traditional budgeting Most frequently used by local governments Most simple Primary emphasis CONTROL Focus is on inputs (what is to be spent) 147 Line Item Example Account Superior Court Clerk Current Budget Proposed Budget % Increase Decrease Salaries $55,000 $57,200 4% Overtime $5,000 $5,500 10% Part-time $10,000 $12,000 20% Supplies $4,000 $4, % Travel $1,000 $1,500 50% Total $75,000 80, %

75 Line Item Disadvantages Encourages incrementalism Base initial budget requests on the amount of budgeted resources in last year s budget Does not require departments to consider alternative methods to spending or delivering services. Does not consider if the service should even be offered. 149 Activity Budget Next step up from line-item budgeting Various activities within the same department are recognized

76 Activity Budget Finance Department Account Accounting Treasury Budget Salaries $55,000 $57,200 $62,000 Overtime $5,000 $5,500 $1,000 Part-time $10,000 $12,000 $2,000 Supplies $4,000 $4,500 $3,000 Travel $1,000 $1,500 $2,000 Total $75,000 80,700 $70, Activity Budget Activities within other departments: Police Fire Public Works

77 Program Budget Organizes proposed expenditures according to broader overall functions Focus is no longer on what is purchased Focus is on what services are being provided Goals are defined and expenses are allocated based on the defined goal 153 Program Budget Example: Enhance accessibility of official records for public use by expanding services available via the Internet Provide on-line access of recorded court and real estate documents by September

78 Program Budget Sample Program Budget Superior Court Clerk Program: Record accessibility Expenditure Classification Previous Fiscal Year Actual Current Fiscal Year Budget Next Fiscal Year Request Salaries $ $ $ Supplies $ $ $ Contractual Services $ $ $ Capital Outlay $ $ $ Total $ $ $ 155 Program Budget Drawbacks Reorganization of the budget Many activities contribute to more than one objective Not all resources can be assigned to a single program

79 Performance Budget Advantages emphasizes department performance objectives rather than purchases of resources emphasizes efficiency and effectiveness of services 157 Performance Budget Disadvantages more complicated than line-item or program budgets does not require departments to consider alternatives does not consider whether the service is worth the cost of providing it

80 Zero-Based Budget Departments show various levels of service that can be provided at different levels of funding Advantages makes governments more flexible, eliminates unproductive programs, improves effectiveness by forcing department heads to consider total programs each year 159 Zero-Based Budget Disadvantages generates a lot of paperwork, not realistic to consider zeroing some programs, does not take into account state and federally mandated services, does not compare service costs with what a service is actually worth

81 Review 161 Review The budget that offers the most control is A. Line-item B. Zero-base C. Performance D. Activity

82 Review The budget that offers the most control is A. Line-item B. Zero-base C. Performance D. Activity 163 Review What kind of budget is this? Finance Department Account Accounting Treasury Budget Salaries $55,000 $57,200 $62,000 Overtime $5,000 $5,500 $1,000 Part-time $10,000 $12,000 $2,000 Supplies $4,000 $4,500 $3,000 Travel $1,000 $1,500 $2,000 Total $75,000 80,700 $70,

83 Review What kind of budget is this? Activity Finance Department Account Accounting Treasury Budget Salaries $55,000 $57,200 $62,000 Overtime $5,000 $5,500 $1,000 Part-time $10,000 $12,000 $2,000 Supplies $4,000 $4,500 $3,000 Travel $1,000 $1,500 $2,000 Total $75,000 80,700 $70, Review What kind of budget organizes proposed expenditures according to broader overall functions? A. Program B. Activity C. Line item D. Basic

84 Review What kind of budget organizes proposed expenditures according to broader overall functions? A. Program B. Activity C. Line item D. Basic 167 Administering the Budget

85 Budget Administration Responsibility Chief Executive (Manager, Mayor) Five Major Components Authorization Appropriation Allocation Allotments Adjustments 169 Budget Administration Components Authorization Law that permits spending money (ordinance or resolution) Appropriation Legal authority to spend up to a certain amount

86 Budget Administration Components Allocations Provide further detail to the amounts approved by governing body Allotments Divide appropriation into periods of time Adjustments Necessary when spending varies from initial budget 171 Expenditure Controls Purchase orders method of authorizing expenditures and controlling spending May encumber contracts and budgeted expenditures Unallocated reserves may hold a portion of the budget in a contingency line for unexpected expenditures or in case of revenue shortfall Line-item appropriations travel, supplies, etc

87 Expenditure Controls Position control ensures positions are limited to those funded in the budget process Ceilings or freezes used in financial crisis to freeze spending on some or all items or cap expenditures for some or all purposes 173 Communicating the Budget

88 Maximize Use of the Web Gwinnett County Property Tax Calculator 175 Maximize Use of the Web Gwinnett County FY2018 Budget in Brief

89 Maximize Use of the Web Gwinnett County FY2018 Budget in Brief 177 Budget Increases Use an example that the public can relate to: The millage rate increase of $.46 per $1,000 would result in a property tax increase for a homeowner with a $140,000 house and $10,000 homestead exemption of $23.92, about the cost of a hardback book

90 Financial Reporting and Audits 179 Accounting O.C.G.A Requires use of a uniform chart of accounts

91 Preparation of External Financial Statements Required to be prepared in accordance with statements of the Governmental Accounting Standards Board as follows: Management s Discussion and Analysis Government-wide financial statements Fund-level financial statements Note disclosures Budgetary comparison schedules on the General Fund and each fund that has a legally adopted budget 181 Audit Opinion An opinion on the fair presentation in all material respects of financial statements Unmodified opinion Modified opinion Qualified opinion Adverse opinion Disclaimer of opinion

92 Report Requirements Auditor compliance with GAGAS (Generally Accepted Government Auditing Standards) Reporting on internal control and compliance with provisions of laws, regulations, contracts, and grant agreements Deficiencies in internal control, fraud, noncompliance with provisions of laws, regulations, contracts, grant agreements, and abuse 183 Report Requirements Views of responsible officials Confidential or sensitive information Distribution requirements

93 Georgia Law Requirements O.C.G.A Each unit of local government with a population over 1,500 or expenditures of $300,000 must have an annual audit. Units of local government with a population of 1,500 or less or expenditures less than $300,000 are required to complete an audit every two years for both fiscal years. 185 Georgia Law Requirements Audit is due 180 days after the year-end of your local government to the State of Georgia Local Government Division Department of Audits and Accounts. Corrective action plan is due 30 days after your audit is due to the state Department of Audits

94 Independent Auditor Selection Qualified to perform government audits CPE required to complete every two years 24 hours of CPE pertaining to government audits or government environment as part of an 80-hour total requirement RFP sample Georgia Department of Audits Other Types of Audits Performance Audits Measure efficiency of performance of various activities Program Audits Evaluate the overall effectiveness of programs Both Performance and Program Audits help governments make better decisions about whether services and programs are worth the investment of revenues

95 DCA Reporting Georgia law requires completion of Report of Local Government Finances. Report form references uniform chart of account numbers to facilitate consistency in information reported. Data are used to publish the Local Government Fiscal Planning Guide, which can be accessed on the DCA website Financial Highlights Report Consolidation of information reported in Report of Local Government Finance

96

97 Governmental Accounting, Auditing, and Financial Reporting APPENDIX D Name of Government Balance Sheet Name of Government Governmental Balance Funds Sheet June Governmental 30, 2022 Funds June 30, 2022 Total Total Nonmajor Governmental General Capital Projects Debt Service Funds Funds ASSETS Cash and cash equivalents $ 6,127,206 $ 1,090,139 $ 1,362,371 $ 4,281,747 $ 12,861,463 Investments 14,989,065 4,980,521 1,000, ,805 21,508,391 Receivables (net of allowance for uncollectibles) 6,067,247-4,309,618 2,502,201 12,879,066 Intergovernmental receivable 513, , ,445 1,709,483 Due from other funds 145, , ,000 Due from component unit 32, ,615 Inventories 806, ,623 Prepaid items 48, ,728 Advances to other funds 290, ,148 Total assets $ 29,019,597 $ 6,913,119 $ 6,671,989 $ 8,011,812 $ 50,616,517 LIABILITIES Accounts payable 1,646, ,358 2,162,601 Contracts payable - 1,129, ,129,196 Retainage payable - 1,070, ,070,044 Accrued liabilities 2,504, ,957 2,936,017 Deposits payable ,367 18,367 Due to retirement systems 2,024, ,108 2,102,213 Due to other funds 335, , ,000 Advances from other funds , ,148 Bond anticipation notes payable - 6,905, ,905,200 Unearned revenue-other 2,089, ,585 2,317,521 Total liabilities 8,599,344 9,104,440-1,719,523 19,423,307 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-property taxes 617,585-26, ,014 Unavailable revenue-special assessments - - 4,230,000-4,230,000 Total deferred inflows of resources 617,585-4,256,429-4,874,014 FUND BALANCES (DEFICITS) Nonspendable: Endowment $ - $ - $ - $ 10,000 $ 10,000 Inventory 806, ,623 Prepaid items 48, ,728 Long-term interfund advances 290, ,148 Restricted: - Special assessment project - 875, ,000 Library purposes ,276 52,276 Housing services , ,881 Community redevelopment ,514,328 4,514,328 Law enforcement , ,200 Youth programs ,297 1,297 Nonrecurring repairs and other parking improvements , ,917 General obligation debt , ,560 Special assessment debt - - 1,504,000-1,504,000 Committed: Special asesssment project - 1,200, ,200,000 Revenue stabilization 407, ,377 Open space , ,776 Assigned: Purchases on order 592, ,659 Subsequent year's budget: appropriation of fund balance 2,215, ,215,728 Unassigned 15,442,019 (4,266,321) ,175,698 Total fund balances (deficits) 19,802,668 (2,191,321) 2,415,560 6,292,289 26,319,196 Total liabilities, deferred inflows of resources, and fund balances (deficits) $ 29,019,597 $ 6,913,119 $ 6,671,989 $ 8,011,812 $ 50,616,517 The notes to financial statements are an integral part of this statement. A-1

98 Governmental Accounting, Auditing, and Financial Reporting APPENDIX D Name of Government Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2022 Total Total Nonmajor Governmental General Capital Projects Debt Service Funds Funds REVENUES Property taxes $ 31,331,083 $ - $ 7,935,396 $ 5,539,162 $ 44,805,641 Sales taxes 44,368, ,368,865 Franchise taxes 1,537, ,537,833 Licenses and permits 2,649, ,649,889 Intergovernmental 9,705, ,480-7,185,616 17,766,027 Charges for services 19,091, ,091,893 Fines and forfeitures 6,670, ,670,562 Investment earnings 3,349, , ,967 38,681 3,831,798 Fees ,976,526 4,976,526 Special assessments , ,000 Miscellaneous 4,644, ,712 4,974,420 Total revenues 123,350,294 1,076,100 8,647,363 18,069, ,143,454 EXPENDITURES Current: General government 29,778, ,778,662 Public Safety 56,335, ,828 56,726,678 Highways and streets 23,233, ,238,979 27,472,013 Sanitation 8,140, ,140,187 Culture and recreation 9,735, ,295,900 23,030,913 Debt service: Principal - - 4,718,317-4,718,317 Interest - - 3,236,206-3,236,206 Bond issuance costs 150, , ,710 Capital outlay General government - 462, ,180 Public Safety - 1,465, ,465,901 Highways and streets - 9,574, ,574,399 Sanitation - 1,696, ,696,099 Culture and recreation - 1,443, ,443,330 Total expenditures 127,372,746 14,641,909 8,077,233 17,925, ,017,595 Excess (deficiency) of revenues over expenditures (4,022,452) (13,565,809) 570, ,990 (16,874,141) OTHER FINANCING SOURCES (USES) Transfers in 20,944 1,831,625 1,226, ,695 3,331,604 Transfers out (4,939,824) (1,214,133) (621,625) (284,231) (7,059,813) Refunding bonds issued - - 5,810,000-5,810,000 Premium on refunding bonds issued , ,914 Special assessment bonds issued - 4,700, ,700,000 Discount on special assessment bonds issued - (10,000) - - (10,000) Payment to refunded bond escrow agent - - (5,937,204) - (5,937,204) Capital lease 146, ,042 Sale of general capital assets 31, ,450 Insurance recoveries 194, ,082 Total other financing sources (uses) (4,547,306) 5,307, ,425 (31,536) 1,456,075 Net change in fund balances (8,569,758) (8,258,317) 1,297, ,454 (15,418,066) Fund balances-beginning 28,372,426 6,066,996 1,118,005 6,179,835 41,737,262 Fund balances (deficit)-ending $ 19,802,668 $ (2,191,321) $ 2,415,560 $ 6,292,289 $ 26,319,196 The notes to financial statements are an integral part of this statement. A-2

99 Governmental Accounting, Auditing, and Financial Reporting APPENDIX D Name of Name Government of Government Statement Statement of Net of Position Net Position Proprietary Proprietary Funds Funds June 30, June , 2022 Business-type Activities Governmental Activities Total Internal Service Water Transit Enterprise Funds Funds ASSETS Current Assets: Cash and cash equivalents $ 1,388,998 $ 2,310,846 $ 3,699,844 $ 5,883,720 Investments 2,136,642-2,136, ,286 Restricted assets-customer deposits 30,715-30,715 - Interest receivable 22,468 2,383 24,851 7,079 Accounts receivable 4,145,017 33,734 4,178,751 - Due from other funds - 12,000 12,000 - Intergovernmental receivable - 877, , ,192 Inventories - 117, ,581 22,671 Prepaid items ,823 Total current assets 7,723,840 3,353,839 11,077,679 6,691,771 Noncurrent Assets: Capital Assets: Land 584,715 1,326,685 1,911,400 - Buildings 5,274,379 7,639,062 12,913,441 87,745 Machinery, equipment, and vehicles 1,376,709 9,952,998 11,329,707 5,283,268 Water distribution system 35,422,287-35,422,287 - Construction-in-progress 5,371,664-5,371,664 - Less accumulated depreciation (17,093,131) (9,869,210) (26,962,341) (2,466,987) Total noncurrent assets 30,936,623 9,049,535 39,986,158 2,904,026 Total assets 38,660,463 12,403,374 51,063,837 9,595,797 LIABILITIES Current liabilities: Accounts payable 1,057, ,741 1,590, ,023 Accrued liabilities - 11,412 11,412 - Compensated absences 5,990-5,990 16,679 Claims and judgments ,174,256 Retainage payable 24,937-24,937 - Customer deposits payable-restricted assets 30,715-30,715 - Accrued interest payable 143, ,219 - Bond anticipation note payable 1,625,000-1,625,000 - Intergovernmental payable - 28,547 28,547 - Due to retirement system 35,364-35,364 3,268 Bonds payable - current 938, ,967 - Unearned revenue - 2,192,549 2,192,549 - Total current liabilities 3,861,456 2,765,249 6,626,705 3,008,226 Noncurrent liabilities: Compensated absences 53,907-53,907 27,589 Claims and judgments ,386,533 Bonds payable 9,103,170-9,103,170 - Other post employment benefits obligation 259, ,000 61,000 Total noncurrent liabilities 9,416,077-9,416,077 1,475,122 Total liabilities 13,277,533 2,765,249 16,042,782 4,483,348 NET POSITION Net investment in capital assets 20,006,772 9,049,535 29,056,307 2,904,026 Unrestricted 5,376, ,590 5,964,748 2,208,423 Total net position 25,382,930 9,638,125 35,021,055 $ 5,112,449 Adjustment to report the cumulative internal balance for the net effect of the activity between the internal service funds and the enterpise funds over time 297,518 Net position of business-type activities (page 30) $ 35,318,573 The notes to financial statements are an integral part of this statement A-3

100 Governmental Accounting, Auditing, and Financial Reporting APPENDIX D Name of Government Name of Government Statement of Revenues, Expenses and Changes in Net Position Statement of Revenues, Expenses and Changes in Net Position Proprietary Funds Proprietary Funds For the Year Ended June 30, 2022 For the Year Ended June 30, 2022 Business-type Activities Governmental Activities Total Internal Service Water Transit Enterprise Funds Funds Operating revenues: Charges for services: Metered water sales $ 9,312,150 $ - $ 9,312,150 $ - Tap fees 12,050-12,050 - Passanger fares - 762, ,983 - Contract transit - 126, ,353 - Charter Risk management ,632,108 Fleet management ,902,063 Miscellaneous 133,423 40, ,970 - Total operating revenues 9,457, ,131 10,387,754 4,534,171 Operating expenses: Personnel services 2,821,081-2,821, ,467 Materials and supplies 3,556,232 1,050,965 4,607, ,229 Contractual services 781,741 4,008,669 4,790,410 1,251,500 Claims ,761,680 Depreciation 886, ,289 1,713, ,469 Total operating expenses 8,045,294 5,886,923 13,932,217 4,898,345 Operating income (loss) 1,412,329 (4,956,792) (3,544,463) (364,174) Nonoperating revenues (expenses): Intergovernmental 10, , ,441 - Investment earnings 254,072 10, , ,530 Loss on disposal of property (2,278) (88,031) (90,309) - Interest expense (416,820) - (416,820) - Total nonoperating revenues (expenses) (154,059) 313, , ,530 Income before capital contributions and transfers 1,258,270 (4,643,530) (3,385,260) (224,644) Capital contributions - 1,174,511 1,174,511 - Transfers in - 3,728,209 3,728,209 - Change in net position 1,258, ,190 1,517,460 (224,644) Net position-beginning 24,124,660 9,378,935 5,337,093 Net position-ending $ 25,382,930 $ 9,638,125 $ 5,112,449 Adjustment for the net effect of the current year activity between the internal service funds and the enterprise funds. 16,964 Changes in net position of business-type activities (page 31) $ 1,534,424 The notes to financial statements are an integral part of this statement. A-4

101 Example of Rollback Computation The first step in determining whether the three public hearing must be advertised and held and a press release issued is to compute a rollback rate using the roll-back form developed by the Department of Revenue for this purpose. Here s an example of one that has been completed: PT COMPUTATION OF MILLAGE RATE ROLLBACK AND PERCENTAGE INCREASE IN PROPERTY TAXES FOR YEAR 2017 COUNTY Lee TAXING JURISDICTION County Wide INFORMATION FOR THE SHADED PORTIONS OF THIS SECTION MUST BE ENTERED This information will be the actual values and millage rates certified to the Department of Revenue for the applicable tax years. DESCRIPTION 2016 DIGEST REASSESSMENT OF EXISTING REAL PROP OTHER CHANGES TO TAXABLE DIGEST 2017 DIGEST REAL 673,624,039 2,066,360 26,215, ,905,475 PERSONAL 109,797, , ,299,682 MOTOR VEHICLES 81,054,781 2,398,108 83,452,889 MOBILE HOMES 8,901,687 2,134,641 11,036,328 TIMBER -100% 63, , ,877 HEAVY DUTY EQUIP GROSS DIGEST 873,941,524 2,066,360 30,824, ,832,251 EXEMPTIONS 93,735, ,045,955 96,781,795 State of Georgia Forest Land Assistance Grant Value 500, ,000,000 1,000,000 NET DIGEST 780,205,684 2,066,360 26,778, ,050,456 (PYD) (RVA) (NAG) (CYD) 2016 MILLAGE RATE >>> PROPOSED MILLAGE RATE >>> THIS SECTION WILL CALCULATE AUTOMATICALLY UPON ENTRY OF INFORMATION ABOVE DESCRIPTION ABBREVIATION AMOUNT FORMULA 2016 Net Digest PYD 780,205,684 Net Value Added By Reassessment RVA 2,066,360 Other Net Changes to Taxable Digest NAG 26,778, Net Digest CYD 809,050,456 (PYD+RVA+NAG) 2016 Millage Rate PYM Millage Equivalent of Reassessed Value ME (RVA/CYD) * PYM Rollback Millage Rate for 2017 RR PYM - ME COMPUTATION OF PERCENTAGE INCREASE IN PROPERTY TAXES Rollback Millage If the 2017 Proposed Millage Rate for this Taxing Jurisdiction exceeds the Rollback Millage Rate Rate computed above, this section will automatically calculate the amount of increase in property 2017 Millage Rate taxes that is part of the notice required in O.C.G.A. Section (c) (2) Percentage Increase 22.51% In this example, Lee County is proposing a current year millage rate that is higher than the computed rollback rate. As such, the county has triggered the requirements of O.C.G.A , which compels the county to issue a press release, and advertise and hold the three public hearings, announcing a 22.51% increase in taxes, before the final millage rate can be adopted. A-5 Department of Revenue / Local Government Services Division Revised March

102 Example of Advertisement Separating Unincorporated and Incorporated NOTICE The Lee County Board of Commissioners does hereby announce that the millage rate will be set at a meeting to be held at the County Administration Building located at 411 Smith St, Smithville, Georgia, on July 21, 2017 at 7:00 PM and pursuant to the requirements of does hereby publish the following presentation of the current year's tax digest and levy, along with the history of the tax digest and levy for the past five years CURRENT 2017 TAX DIGEST AND FIVE YEAR HISTORY OF LEVY INCORPORATED Real & Personal 199,954, ,731, ,087, ,322, ,854, ,117,554 Motor Vehicles 16,119,703 20,925,010 19,878,818 15,710,058 16,976,791 17,473,604 Mobile Homes 972,190 1,142,872 1,311,090 1,580,508 1,202,433 1,534,956 Timber 100% , Heavy Duty Equipment Gross Digest 217,046, ,799, ,277, ,687, ,033, ,126,114 Less M & O Exemptions 22,855,750 33,220,811 20,816,419 19,344,151 20,011,268 19,535,511 Net M & O Digest 194,191, ,578, ,460, ,342, ,022, ,590,603 Forest Land Grant Value Adjusted Net M & O Digest 194,191, ,578, ,460, ,342, ,022, ,590,603 Gross M & O Millage Rate Less Millage Rate Rollbacks Net M & O Millage Rate Net Taxes Levied 1,654,508 1,580,561 1,660,535 1,907,554 1,987,682 2,404,073 UNINCORPORATED Real & Personal 352,452, ,331, ,529, ,813, ,566, ,087,603 Motor Vehicles 35,461,805 48,597,722 52,612,218 53,551,368 64,077,990 65,979,285 Mobile Homes 4,375,133 4,898,374 6,012,070 7,214,484 7,699,254 9,501,372 Timber - 100% 828, ,303 1,119,181 1,208,637 63, ,877 Heavy Duty Equipment Gross Digest 393,117, ,384, ,273, ,787, ,407, ,706,137 Less M & O Exemptions 45,210,855 50,276,647 51,091,066 50,167,732 73,724,572 79,246,284 Net M & O Digest 347,907, ,107, ,181, ,619, ,683, ,459,853 Forest Land Grant Value , ,000 1,000,000 Adjusted Net M & O Digest 347,907, ,107, ,181, ,719, ,183, ,459,853 Gross M & O Millage Rate Less Millage Rate Rollbacks Net M & O Millage Rate Net Taxes Levied 2,543,200 2,602,020 2,726,655 3,425,473 4,131,233 5,358,710 TOTAL COUNTY Total County Value 542,098, ,686, ,642, ,062, ,205, ,050,456 Total County Taxes Levied 4,197,708 4,182,581 4,387,190 5,333,027 6,118,915 7,762,783 Net Taxes $ Increase 385,602 (15,127) 204, , ,888 1,643,868 Net Taxes % Increase 7.8% -0.4% 4.9% 21.6% 14.7% 26.9% A-6 Department of Revenue / Local Government Services Division Revised March

103 Example of Advertisement Combining County Unincorporated and Incorporated NOTICE The Lee County Board of Commissioners does hereby announce that the millage rate will be set at a meeting to be held at the County Administration Building located at 411 Smith St, Smithville, Georgia, on July 21, 2017 at 7:00 PM and pursuant to the requirements of does hereby publish the following presentation of the current year's tax digest and levy, along with the history of the tax digest and levy for the past five years CURRENT 2017 TAX DIGEST AND FIVE YEAR HISTORY OF LEVY COUNTYWIDE Real & Personal 552,588, ,062, ,616, ,136, ,421, ,205,157 Motor Vehicles 51,581,508 69,522,732 72,491,036 69,261,426 81,054,781 83,452,889 Mobile Homes 5,347,323 6,041,246 7,323,160 8,794,992 8,901,687 11,036,328 Timber - 100% 828, ,303 1,119,181 1,283,037 63, ,877 Heavy Duty Equipment Gross Digest 610,346, ,184, ,550, ,475, ,441, ,832,251 Less M & O Exemptions 68,066,605 83,497,458 71,907,485 69,511,883 93,735,840 98,781,795 Net M & O Digest 542,279, ,686, ,642, ,963, ,705, ,050,456 Forest Land Grant Value , ,000 1,000,000 Adjusted Net M & O Digest 542,279, ,686, ,642, ,063, ,205, ,050,456 Gross M & O Millage Rate Less Millage Rate Rollbacks Net M & O Millage Rate Net Taxes Levied 3,866,455 4,182,062 4,386,177 5,330,215 6,116,813 7,750,703 Net Taxes $ Increase 381, , ,598 1,633,890 Net Taxes % Increase 8.4% 8.26% 4.9% 21.5% 14.8% 26.7% Use this example for the Board of Education s CURRENT TAX DIGEST AND FIVE YEAR HISTORY OF LEVY advertisement. SPECIAL NOTE: The actual CURRENT TAX DIGEST AND FIVE YEAR HISTORY OF LEVY advertisements for county and school districts must be included at the time the digest is submitted to the revenue commissioner. The commissioner is not authorized to accept the digest of any county that has not submitted these advertisements. Department of Revenue / Local Government Services Division Revised March A-6