WPTA Small Cities Roundtable

Transcription

1 WPTA Small Cities Roundtable 2017 Conference Chelan, WA Presented by Toni Nelson, Finance Consultant

2 How do you stay on top of changes? Financial/Auditing Chart of Accounts (BARS) Review and analysis Cash basis methods for auditing have changed Tracking the exceptions to cash Reporting requirements GASB impacts on cash basis entities Evaluation of financial position Compliance Issues Asset Management Cost Allocation plans Internal Controls Payroll Non-Routine Transactions Financial Reporting OPMA/PRA Training

3 What s on the Horizon Advances in technology On-line filing of the annual report is the expectation On-line BARS manual Changes may occur at any time Audit Issues Financial condition part of audit Cash Basis audits will continue to evolve Schedule 11 Financial policies for smaller entities Fund balance and reserves Cost Allocation Asset Management Internal Control (there are never enough controls)

4 BARS updates How do you stay current? Current online version only Unable to access prior versions or updates Develop method for storing prior editions Updates to the manual are done more frequently. Use BARS Alerts to stay on top of issues

5 What s your method for tracking? Have you implemented a method for review of online BARS? How can you assure that a substantial change to BARS is not overlooked? What is your method for recording and distributing the changes to those responsible for their implementation? The BARS -overview of changes is updated at the same time as the manual is revised. Develop a system of review

6 Overview of Significant changes

7 CHART OF ACCOUNTS review & update Several changes to chart of accounts Refer to Overview of Significant Changes Upload Schedule 01 to view red and yellow SAO flags Be aware of significant changes such as: elimination of 370 s for cash basis entities Addition of 385/585 Special/Extraordinary items Prior period adjustments changed to 38810/58810 BARS alert on the changes of 386/586 to 389/589

8 Notes to Financials NOTES TO FINANCIALS - Note 1 removes former item 1h Other financial resources and uses. Pension note updated for 2 nd year of reporting Volunteer Fire Fighters note disclosure use if applicable Report only those plans applicable to your entity

9 Reporting changes for 2016 State Retirement System reporting for PERS PERS 1 UAAL combine with PERS 1 Utilize the SAO worksheet and DRS PEFI data Note - enter the allocation percentage as a %, just like it is published in the PEFI Plan DRS-Schedule of Employer and DRS-Schedule of Collective Nonemployer Allocations Pension Amounts Ending Balance 12/31/2016 Employer Contributions Allocation Percentage PERS 1 5,370,471,000 - PERS 1 UAAL (combine with PERS 1 for reporting) 5,370,471,000 - PERS 2/3 5,034,921,000 - Public Safety ERS 2 42,498,000 - SERS 2/3 656,767,000 - TRS 1 3,414,237,000 - TRS 2/3 1,373,297, Total Net Pension Liability (Schedule 09) - LEOFF 1 (1,030,286,000) - LEOFF 2 (581,630,000) - Net Pension Assets (do not net with the liabilities) - Not reported on Schedule 09 Below are the 2015 amounts: Plan DRS-Schedule of Collective Pension Amounts Ending Balance 12/31/2015 DRS-Schedule of Employer and Nonemployer Allocations Employer Contributions Allocation Percentage PERS 1 5,230,930,000 - PERS 1 UAAL (combine with PERS 1 for reporting) 5,230,930,000 - PERS 2/3 3,573,057,000 - Public Safety ERS 2 18,252,000 - SERS 2/3 406,151,000 - TRS 1 3,168,142,000 - TRS 2/3 843,802, Total Net Pension Liability (Schedule 09) - LEOFF 1 (1,205,221,000) - LEOFF 2 (1,027,800,000) - Net Pension Assets (do not net with the liabilities) - Not reported on Schedule 09

10 Schedule 09 -Changes for 2016 Schedule of Liabilities Changes to the ID Nos. for types of debt and liabilities to accommodate the DOC/Debt Survey requirements Pension Liabilities MUST be reported. Don t forget to include on Schedule 09 2 nd year of reporting differences between years may be shown at net. Option to participate in Street report data collection

11 Report changes worth repeating Notes to Financials Note X Debt Service Requirements Format change eliminates the separation of debt types and now looks only at principal and interest distributions.

12 Don t forget about additional disclosures Other Disclosures new requirement

13 Reporting issues that still challenge us FUND CLASSIFICATION AND FUND BALANCE DESIGNATION Emphasis on the appropriate classification and designation of fund balance in the financial statements Cash Basis reporting entities only have reserved and unreserved Reserved = external restrictions Unreserved = internal commitments Must be adopted by highest level of authority (ordinance for cities; resolution for counties/spd) Careful analysis of all fund balances should be completed prior to submitting the annual report. Caution: Special revenue and capital project/reserve funds may not necessarily be reserved per BARS/GASB definitions

14 Emerging Issues Utility Taxes Recording taxes in the proper fund? Recording expense for utility tax? State Budget impacts on Local Government LEOFF 2 state contribution State Shared Revenues Fireman s Pension Liability Property Tax demonstrate levy imposed and applied Actuarial study needed?

15 Financial Policy requirements or best practice?

16 Fund Balance and Reserves Fund Balance is integral to fiscal health Evaluated at audit Considered a best practice

17 Capital Asset Management New chapter in the Cash Basis BARS manual (2012) Recommendation to adopt policies and procedures Focus is to meet accountability requirements MRSC sample policies GFOA asset management publications Capital Asset Policies Written policies for monitoring assets Adopted by the governing body Tracking system Actual procedures to carry out the requirements of the policy Collects and updates capital asset information Demonstrates accountability for capital assets Physical Inventory Verifies existence of assets

18 Cost Allocation-methodology required Cash Basis BARS manual New section added in 2012 Performance Audit (Nov. 28, 2011) Recommendation to adopt Cost Allocation Plans Review basic principals Shared resources must be allocated fairly Specific projects = Direct Costs Costs which cannot readily be associated with specific projects = Indirect Costs Must provide a uniform method Must be equitable allocation of indirect costs across all funds and departments

19 Beware of Pitfalls Does the Indirect Cost (IDC) rate/plan result in an equitable sharing of costs? Allocation factors that are simple may not be fair Updating your factors used to allocate costs Evaluate on regular basis Must demonstrate a benefit to the fund being charged and additionally demonstrate the benefit is commensurate with the amount being charged.

20 Additional Resources MRSC Financial Policies launching new resources in cooperation with the SAO in late April or early May. GFOA Cost allocation publications SAO website for Performance audit and presentations given on this topic

21 Internal Controls Internal Controls are not confined to just the Finance Department. Public Works (meter reading, purchasing ) Public Safety Finance -should have controls over the selection and application of accounting principles Written financial policies or documentation to support implementation of procedure for review and control Antifraud programs and controls Documentation for internal control process Accounts receivable Accounts payable Payroll Utility billing systems

22 Internal Controls You can t have enough 1. Segregation of Duties Problem One employee who performs all facets of a transaction (customer receipt to bank deposit) Solution Divide functions so that multiple employees are performing parts of the whole 2. Cross Training Encourages segregation of duties and level of monitoring Provides long term stability to city hall 3. Perform analytical procedures on a regular basis Review the financial reports How many utility customers? Average receivables? Payables? Employee work schedules How much overtime is normal and when 4. Consider a Monitoring program with City next door Joint community monitoring

23 Internal Control -MONITORING Single most important tool for small cities Relatively easy to implement Provides basic level of internal control Can be performed by either elected officials or personnel from other departments. Example: Review financial reports using basic analytical concepts. What do you except to see vs. what you see Ask questions when you need clarity

24 Internal Controls -documentation Controls over non-routine and nonsystematic transactions (journal entries) Documentation for control process over all financial transaction entries (especially for the oversight and review of modified &/or corrected transactions) Establish a procedure for review A systematic recording of nonroutine transactions May vary with your accounting software program If you software does not monitor, use an alternate method of such as Excel to track and record these nonroutinetransactions

25 OPMA & PRA Resources Open Public Meetings Act: How It Applies to Washington Cities and Counties MRSC Report No. 60 Revised, May, Open Government Internet Manual comprehensive summary on MRSC and Attorney General s web site

26 Training Training can be taken online, in person, or by other means. Training resources, videos, and more information about the Act (a Q & A ) are available on the Attorney General s Office Open Government Training Web Page: OPMA/PRA Training How are you tracking? Retention of training records for audit purposes 26

27 Records Retention All public records are subject to the records retention schedules WA State Archives (division of Secretary of the State) Retention Schedules available on-line Extensive schedule Local Government (CORE) schedule

28 Records Management Training cont d. Complete year of 2017 trainings provided on the website. Online Tutorials and videos Recorded Webinar vidoes

29 Resources available to assistance MRSC phone, and website support. Askmrsc or send an direct: Phone: x 109 Local Government Performance Center/SAO