Treasurers 101. Lorie Race, CFO City of Twin Falls Jason Faulkner, Finance Director City of Post Falls MOUNTAIN WEST INSTITUTE 2015

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1 Treasurers 101 Lorie Race, CFO City of Twin Falls Jason Faulkner, Finance Director City of Post Falls MOUNTAIN WEST INSTITUTE 2015

2 Treasurers 101 Budgeting Financial Audit CAFR (Comprehensive Annual Financial Report) Internal Controls Help!

3 Treasurers 101- Budgeting Idaho code provides city council is responsible for preparing budget. Mayor, City Manager, CFO, Finance Director, or City Clerk usually prepares the budget. It is important to remember that the budget demonstrates the City Council s priorities in its investment in the community.

4 Treasurers 101- Budgeting (continued) City Council should be concerned with translating the city s vision of the future into reality. Strategic Planning Set budget policy priorities What levels of service should the city provide? What expenditures are necessary to support future growth and development?

5 Treasurers 101- Budgeting (continued) Budget Basics Keep it easy to understand. A Budget is a management tool. Budget should relate to the comprehensive plan. Budget year: October 1 st to September 30 th.

6 Treasurers 101- Budgeting (continued) Budget Structure Governmental Funds General Fund, Special Revenue, Debt Service, Capital Projects, and Permanent. Proprietary Funds Enterprise and Internal Service. Fiduciary Funds Pension and Agency.

7 Treasurers 101- Budgeting (continued) Budget Structure Organization Units Police, Fire, Parks, Economic Development, Finance, etc. Revenue Sources Taxes, Charges for Services, Intergovernmental, Interest, Donations, Contributions, etc.

8 Treasurers 101- Budgeting (continued) Budget Calendar/Checklist Helps to ensure that all information is timely. Date material distributed. Date task must be completed. Shows responsible parties for task. Department Heads, Mayor, and Council understand time-line. Helps to meet legal time-lines.

9 Treasurers 101- Budgeting (continued) Budget Kickoff Budget Calendar/Checklist. Debt Service Schedule. Year-to-Date reports. Prior 2 years of financial data. Property Tax Scenarios: 0-3% increases Budget Forms: Operating, Personnel, & Capital

10 Treasurers 101- Budgeting (continued) Budget Kickoff To Do List (April) Set Public Hearing Date notify County. Review Calendar Dept., Mayor & Council Set Priorities and Policies for Budget. Review current trends, data, and conditions. Set COLA and other employee costs. (PERSI, medical, etc.) Review capital improvement plans (5 years).

11 Treasurers 101- Budgeting (continued) Budget Forecasting Review long-term debt obligations. Review new construction and annexation rolls wih County in April. Review trends on expenditure line-tems. Refer to AIC Revenue Forecasts Sales Tax, Gas Tax, Liquor Tax

12 Treasurers 101- Budgeting (continued) Budget Checklist Departmental Meetings by Appointment Mayor Councilmembers Financial Officer / Treasurer Public Works Director Department Head Supervisors, too! Long Term Planning Committee

13 Treasurers 101- Budgeting (continued) Budget Checklist Meet with General Fund Department Heads to balance the General Fund Budget. List all budget requests and revenues expected. Calculate General Fund surplus/deficit. List all requests for: Capital, new programs, & new personnel. Negotiate cuts to balance General Fund budget.

14 Treasurers 101- Budgeting (continued) Budget Checklist Preliminary review by Mayor & Council Review General Fund cuts to balance. Review all Capital and New Employee requests. Review all fee increases. Maintain Fund integrity. Funds must balance.

15 Treasurers 101- Budgeting (continued) Budget Checklist Council Meetings before August. Review tentative budget. Set tentative budget through Resolution. Set Hearings for fee increases.

16 Treasurers 101- Budgeting (continued) Budget Checklist Public Hearing Notice Publish twice 7 days apart, starting at least 10 days before, in official newspaper. Include proposed revenues/expenditures along with 2 prior fiscal years. Next fiscal year proposed budget. Current fiscal year budget. Prior fiscal year actual. Publish all fee increases 5% or more.

17 Treasurers 101- Budgeting (continued) Budget Finalizing Council meeting before 2 nd Monday in September. Public Hearing Fee increases. Public Hearing Budget. Approve Final Budget not greater than published amounts. Certify Tax levy by 2 nd Monday in September (L-2). Publish Ordinance once by September 30 th. File Ordinance with Secretary of State. Produce final budget documents and publish on web-site. Provide a recap of budget as approved.

18 Treasurers 101- Budgeting (continued) Budget Monitoring Make Department Heads responsible for budget. Use information for trending, to be used to form next year s budget. Use to help discover errors in accounting. Make sure departments code to actual expense account and not where they have budget money.

19 Treasurers 101- Budgeting (continued) Budget Reporting Send Annual Street Report by December 31 st. Publish annual Street Report by January 15 th. Publish Quarterly Treasurer s Reports. Report to Council each month what they want to see.

20 Treasurers 101- Budgeting (continued) Budget Amendments Determine that the budget needs to be amended because the City needs to expend dollars above the current budget. Do a Notice of Public Hearing. Publish twice 7 days apart, 10 days before, in official newspaper. Have Public Hearing. Adopt an Appropriations Ordinance Amendment.

21 Treasurers 101- Budgeting (continued) Budget Considerations Use the budget priorities to develop an unmet needs list. List comes out of requests presented at budget time that were left unfunded. Each departments is allowed a limited number of unmet needs on the list. List is used during the year if any additional revenue becomes available. Gives a starting point for future budgets.

22 Treasurers 101- Financial Accounting Cities use Fund accounting to records their financial transactions and budgeting. Fund accounting could be comparted to check book accounting with a check book for each fund. Choose software that supports this type of accounting.

23 Treasurers 101- Fund Definition A fiscal and accounting entity with a: Self balancing set of accounts Recording cash and other resources, together with all related liabilities and residual equities or balances, and changes therein, That are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with specific regulations, restrictions or limitations.

24 Treasurers 101- The G s GASB Governmental Accounting Standards Board Formed in 1984 and determines GAAP for state and local governments. GAAP Generally Accepted Accounting Principles Refers to the conventions, rules and procedures that serve as the norm for the fair presentation of financial statements.

25 Treasurers 101- Audit Cities > $250,000 Budget Annual Audit Required by State Law Cities > $100,000 and < $250,000 May do Biennial or Annual Cities > $50,000 an < $100,000 Reviewed Biennial Cities < $50,000 No Audit or Review Required

26 Treasurers 101- Audit Terms Reasonable Assurance Level of assurance that should be obtained from financial audits that the financial statements are fairly presented. Material Weaknesses Reportable conditions identified during the audit process that are of such magnitude that they could potentially result in a material misstatement of the financial statements. Materiality Is it significant or important enough to affect the results in a meaningful way material to the end result.

27 Treasurers 101- Audit Terms Unqualified or clean audit opinion Qualified opinion Disclaim an opinion Adverse opinion Audit Findings Single Audit Based on Federal award amount over $500,000.

28 Treasurers 101- Financial Section Who will write City s Financial Report? Keep in mind the separation of duties. Accountant separate from auditors. Will it be a CAFR? Does your City have a Discretely Presented Component Unit? Example: Urban Renewal

29 Treasurers 101- Financial Section Management Discussion and Analysis Government Wide Financial Statements Government Fund Financial Statements Proprietary Fund Financial Statements Fiduciary Fund Financial Statements Notes to the Financial Statements Required Supplementary Information (RSI) Other Information (Not required by GAAP)

30 Treasurers 101- Internal Control Purpose Reasonable assurance the following objectives are met: Reliability in financial reporting. Effectiveness and efficiency in operations. Compliance with applicable laws and regulations. Safeguarding of City assets. Safeguarding of the employee.

31 Treasurers 101- Components of Internal Controls Control Environment Assignment of authority, policies, and practices. Risk Assessment Staff turnover, information technology Control Activities Preventative, detective, corrective. Information and Communications Treatment of transactions that occur. Monitoring.

32 Treasurers 101- Implementing Internal Controls Policy and Procedure Manuals Credit Card Policy Fixed Assets Policy. Purchasing Policy. Debt Policy. Investment Policy. Cash Handling Policy. All Policies should include appropriate forms and flow charts.

33 Treasurers 101- Internal Control Examples Separate billing and receipting duties. Check approval and signing duties should be separate from check creation. Department code invoices, A/P prepare, and Council approve. All statements should be mailed to the A/P office. Bond employees who handle cash.

34 Treasurers 101- Internal Control Examples Cash, check, credit card payments should balance to daily deposits. All employees should sign a credit card agreement form prior to receiving a credit cards. Deposits safe process in place to transfer deposits from City to the bank (armored car or police). Adequate physical control over check stock, cash receipts, cash, etc.

35 Treasurers 101- Internal Control Examples Do not cash checks out of receipt drawers. Pre-numbered check stock. Positive pay or reverse positive pay. Bank reconciliations prepared by one employee and reviewed by a responsible official (not the preparer). Complaints investigated by someone other than the individual who performed the work.

36 Treasurers 101- HELP!! Join Relevant Associations ICCTFOA Idaho City Clerks, Treasurers, and Finance Officers Association. (Accounting Manual) AIC Association of Idaho Cities (Municipal Guide Book) APT US & C Association of Public Treasurers of United States and Canada GFOA Government Finance Officers Association

37 Treasurer 101- Contact Information Lorie Race, Chief Finance Officer City of Twin Falls (208) Jason Faulkner, Finance Director City of Post Falls (208)