Basics of Governmental Financial Reporting

Transcription

1 Basics of Governmental Financial Reporting Rodeo Sanitary District Board Presentation January 25, 2012 Justin Williams, CPA, CVA

2 FUND ACCOUNTING What is Fund Accounting? Fund accounting groups financial data together into funds or accounts that share a similar purpose.

3 TYPES OF FUNDS Governmental Funds Proprietary Funds Fiduciary Funds

4 GOVERNMENTAL FUNDS Used by the government to account for tax supported activities. Governmental Funds General Fund Special Revenue Funds General Fund, Special Revenue Funds, Capital Project Funds, Debt Service Funds, and Permanent Funds Chief operating fund of a local government. Used to account for all financial resources except those required to be accounted for in a different fund Used to account for revenues raised for a specific purpose. Examples include Gas Tax fund and grant funds.

5 GOVERNMENTAL FUNDS (CONTINUED) Capital Projects Funds Debt Service Funds Permanent Funds Used to report major capital acquisitions separately from ongoing operating activities Used to account for the accumulation of resources for payment of long-term debt and interest First Introduced as part of GASB 34 reporting model

6 PROPRIETARY FUNDS Used to account for the type activities (activities supported, at least in part, by fees or charges). Proprietary Funds Enterprise funds (Rodeo) and Internal Service funds Enterprise Funds Used to report any activity for which a fee is charged to external users for goods and services Internal Service Funds Used to account for the allocation of services between funds

7 FIDUCIARY FUNDS Used to report assets held in a trustee or agency capacity for others and therefore cannot be used to support the governments own operations. Examples: Pension and employee benefit trust funds, investment trust funds (pooled with other entities), agency funds.

8 RODEO SANITARY DISTRICT Financial Statements Independent Auditor s Report Managements Discussion and Analysis (MD&A) Financial Statements Supplementary Information Other Reports

9 INDEPENDENT AUDITOR S REPORT Auditor s responsibility is to express an opinion on the financial statements. Types of Opinions: Unqualified Qualified Adverse Disclaimer

10 MANAGEMENT S DISCUSSION & ANALYSIS Prepared by management to provide users with a narrative introduction, overview and analysis of the financial statements. Contents of MD&A: Discussion of financial statements Condensed comparative data Overall analysis Capital asset and long-term liability activity

11 FINANCIAL STATEMENTS 3 Basic Financial Statements for Proprietary Funds Statement of Net Assets Statement of Revenues, Expenses and Changes in Net Assets Statement of Cash Flows

12 STATEMENT OF NET ASSETS Balance sheet Presented at a single moment in time: June 30, Assets Liabilities = Net Assets Classified format- Current and non-current separated Net assets classified as restricted and unrestricted

13 STATEMENT OF REVENUES, EXPENSES, & CHANGES IN NET ASSETS Income Statement Presents activity over a period of time: The year ended June 30, 2011 Revenue Expenses = Changes in net assets Separate between operating and non-operating Capital Contributions

14 STATEMENT OF CASH FLOWS Required for Proprietary Funds only Format classified into four categories: Cash flows from operating activities Cash flows from noncapital financing activities Cash flows from capital and related financing activities Cash flows from investing activities

15 STATEMENT OF CASH FLOWS (CONTINUED) Cash Flows from Operating Activities Cash Flows from Noncapital Financing Activities Cash Flows from Capital & Related Financing Activities Cash Flows from Investing Activities Generally include all cash flows related to transactions and events included in operating income in the Statement of Revenues, Expenses, and Changes in Net Assets Include borrowing and repayments of debt that is not clearly attributable to capital purposes Include the repayment of debt that is attributable to capital assets, and the purchase of capital assets Include receipt of interest and proceeds from investment sales

16 RECONCILIATION OF OPERATING INCOME TO CASH FLOWS FROM OPERATING ACTIVITIES Illustrates the difference between operating income reported on the Statement of Revenues, Expenses, and Changes in Net Assets and net cash provided by operating activities included in the Statement of Cash Flows.

17 NOTES TO THE FINANCIAL STATEMENTS Summary of Significant Accounting Policies Cash and Investments Other Receivable Capital Assets Long-Term Liabilities Retirement Plan Insurance

18 SUPPLEMENTARY INFORMATION Combining Schedule of Net Assets Combining Schedule of Revenues, Expenses and Changes in Net Assets Schedule of Operating Expenses

19 REPORT ON INTERNAL CONTROL over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Any compliance findings or significant control deficiencies would be included in this report.

20 INTERNAL CONTROL DEFICIENCY Material Weakness Significant Deficiencies Control Deficiency

21 MATERIAL WEAKNESS A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company s financial statements will not be prevented, or detected and corrected on a timely basis.

22 SIGNIFICANT DEFICIENCY A significant deficiency is a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

23 CONTROL DEFICIENCY A deficiency in internal control over financial reporting exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis.

24 SCHEDULE OF FINDINGS Parts required by Government Auditing Standards Criteria, Condition, Cause, Recommendation, Management s Response, Status

25 QUESTIONS? End of Presentation

26 PRESENTER Justin J. Williams, CPA, CVA Partner MANN URRUTIA NELSON CPAS & ASSOCIATES, LLP Sacramento Office 2515 Venture Oaks, Suite 135 Sacramento, CA Tel (916) Fax (916)