How to Get From Here to There: Creating the Entity Wide Financial Statements

How to Get From Here to There: Creating the Entity Wide Financial Statements KASBO Spring Conference 2017 The Process 1. Make all adjustments to governmental and proprietary funds in Munis 2. the entity wide entries 3. Make entity wide entries in a spreadsheet to create entity wide statements 4. Construct the reconciliations See also the handout of sample financial statements Officials 1

Adjustments in Munis Refer to Munis User Guide BGL 2 Munis AFR and Balance Sheets must match the Governmental Funds Balance Sheet and Statement of Revenues, Expenditures and Changes in Fund Balances and the Statement of Net Position and Statement of Revenues, Expenses, and Changes in Net Position for Proprietary Funds Think 60 DAYS Adjustments in Munis GOVERNMENTAL FUNDS Typical adjustments in Munis include: Taxes receivable Accounts payable Sick leave payable KSBIT liability On behalf Officials 2

Think Full Accrual Adjustments in Munis PROPRIETARY FUNDS Typical adjustments for PROPRIETARY FUNDS in Munis include: Food service reimbursement receivable Food service/day care unearned revenue Food service inventory Food service pension entries BALANCE SHEET - GOVERNMENTAL FUNDS June 30, 2016 ASSETS This statement matches Munis 1 2, 21 310 320 360 400 General Special SEEK Facility Support School Debt Current Expense Revenue Capital Outlay Program (FSPK) Construction Service Total Fund Funds Fund Fund Fund Fund Governmental Assets: Cash and cash equivalents 15,239,627 $ 176,103 623,771 $ 5,627,613 $ 3,460,689 $ - $ $ 25,127,803 28,964 Investments 28,964 - - - - - Accounts receivable Taxes 610,010 - - - - - 610,010 Intergovernmental 1,034 1,300,865 - - - - 1,301,899 Other receivables 124,658 - - - - - 124,658 Prepaid workers' compensation premiums 18,409 - - - - - 18,409 Total assets 16,022,702 1,476,968 623,771 5,627,613 3,460,689-27,211,743 TOTAL ASSETS $ 16,022,702 $ 1,476,968 $ 623,771 $ 5,627,613 $ 3,460,689 $ - 27,211,743 LIABILITIES AND FUND BALANCES Liabilities: Accounts payable 404,745 31,596 $ - $ - $ 18,770 $ - $ 455,111 1,113,104 Unearned revenue - 1,113,104 - - - - Current portion of accrued insurance claims liability 64,108 - - - - - 64,108 Current portion of accumulated sick leave 26,172 - - - - - 26,172 Total liabilities 495,025 1,144,700 - - 18,770-1,658,495 Fund Balances: Nonspendable 18,409 - - - - - 18,409 Restricted - 332,268 623,771 5,627,613 3,441,919-10,025,571 Committed 8,000,000 - - - - - 8,000,000 Assigned 1,025,379 - - - - - 1,025,379 Unassigned 6,483,889 - - - - - 6,483,889 Total fund balances 15,527,677 332,268 623,771 5,627,613 3,441,919-25,553,248 TOTAL LIABILITIES AND FUND BALANCES $ 16,022,702 $ 1,476,968 $ 623,771 $ 5,627,613 $ 3,460,689 $ - $ 27,211,743 Officials 3

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended June 30, 2016 This statement matches Munis 1 2, 21 310 320 360 400 General Special SEEK Facility Support School Debt Current Expense Revenue Capital Outlay Program (FSPK) Construction Service Total Fund Funds Fund Fund Fund Fund Governmental Revenues: Local sources: Property taxes 17,621,041 $ - $ - $ 5,353,917 $ - $ - $ $ 22,974,958 1,570,165 Motor vehicle taxes 1,570,165 - - - - - Utility taxes 3,132,617 - - - - - 3,132,617 Earnings on investments 213,766 1,400 - - 170-215,336 B Other local 708,437 621,539 - - - 24 1,330,000 A A A A State sources 35,937,740 3,033,745 621,122 1,082,478-992,871 41,667,956 Federal sources 126,143 3,960,929 - - - - 4,087,072 Total revenues 59,309,909 7,617,613 621,122 6,436,395 170 992,895 74,978,104 Expenditures: Instruction 36,255,117 5,105,817 - - - - 41,360,934 Supporting services: Sum of A 38,634,211 Students 2,431,527 134,126 - - - - 2,565,653 Instructional staff 4,322,868 1,472,757 - - - - 5,795,625 District administration 1,356,910 - - - - - 1,356,910 School administration 3,690,539 36,708 - - - - 3,727,247 Business support services 1,692,154 - - - - - 1,692,154 Operation and maintenance of facilities 5,689,835 1,829 - Sum of B - = 1,398,706-5,691,664 Student transportation 3,175,440 139,659 - - - - 3,315,099 Food services 129,086 - - - - - 129,086 Community services - 556,580 - - - - 556,580 Capital outlay - - - - 1,120,808-1,120,808 Debt service - - - - - 6,571,671 6,571,671 Total expenditures 58,743,476 7,447,476 - - 1,120,808 6,571,671 73,883,431 Excess (deficiency) of revenues over expenditures 566,433 170,137 621,122 6,436,395 (1,120,638) (5,578,776) 1,094,673 Other financing sources (uses): B Proceeds from loss of assets 68,706 - - - - - 68,706 Transfers in 6,763,770 294,383 - - 2,754,225 5,578,776 15,391,154 Transfers (out) (642,982) (604,433) - (7,419,590) (6,535,169) - (15,202,174) Total other financing sources (uses) 6,189,494 (310,050) - (7,419,590) (3,780,944) 5,578,776 257,686 Net change in fund balances 6,755,927 (139,913) 621,122 (983,195) (4,901,582) - 1,352,359 Fund balances - beginning 8,771,750 472,181 2,649 6,610,808 8,343,501-24,200,889 Fund balances - ending $ 15,527,677 $ 332,268 $ 623,771 $ 5,627,613 $ 3,441,919 $ - $ 25,553,248 From the blue box on the Adjustments Page 73,883,431 4,493,993 Entry #2 (1,212,829) Entry #2 (20,207) Entry #5 3,386,205 Entry #3 42,075 Entry #4 342,000 Entry #6, less the change in 6-day portion from PY to CY ($4,388) (64,108) Entry #7 (3,780,000) Entry #3 1,034 Entry #8 $ 77,071,594 Differences Between Gov t Funds and Entity Wide Gov t Funds Purchases of capital assets are expenditures Only debt is short term: paid within 60 days of year end Show activity for each fund Only pension contributions are shown Capital assets are ASSETS Only expense is depreciation All debt is recognized Interfund activity must be eliminated (between gov t and business type) All pension activity is recorded including proportionate share of net pension liability Officials 4

Pension Net deferred outflows pension contributions changes in assumptions Deferred inflows (amortization) Change in net pension liability Pension expense Capital Assets Purchases of capital assets (remove the expenditure) Capital assets Accumulated depreciation Depreciation expense Gain/loss on sale of assets Officials 5

Bond Debt Principal payments (remove the expenditure) Reduction in long term debt Amortization of Advances Bond Refunding Amortization expense Deferred outflows bond refunding Officials 6

Accrued Interest Accrued interest expense Accrued interest payable Sick Leave long term portion Sick leave payouts Change in long term sick leave payable Officials 7

Insurance Claims Liability (KSBIT) Expense (remove it) Reduction in insurance claims liability Interfund Activity Make an entry to zero out any balances for activity between gov t and business type Officials 8

Creating the Adjustments worksheet Begin with the Statement of Net Position Enter balances from the prior fiscal year in the first column (see PY audit report) Add columns for the entry debits and credits, and reference numbers if desired Create a column for current fiscal year balances Create an increase (decrease) column ENTER STATEMENT OF NET POSITION PRIOR ENTITY-WIDE ADJUSTMENTS (PAPER ONLY) June 30, 2016 FISCAL YEAR Calculated Calculated BALANCES increase FY 15 FY 16 (decrease) DEBIT CREDIT ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Assets: Note accounts appearing only on the Cash and cash equivalents entity wide statements are in all caps Investments Accounts Receivable Taxes Intergovernmental 8 (1,034) Other Prepaid workers' compensation premiums Inventory CAPITAL ASSETS 179,909,459 1,212,829 2 2 (711,297) 180,410,991 ACCUM DEPRECIATION 50,237,286 442,459 2 2 (4,493,993) 54,288,820 Total assets 129,672,173 126,122,171 (3,550,002) Deferred outflows of resources: Deferred outflows - pension contributions 2,208,567 1 (994,495) 1,214,072 (994,495) Deferred outflows - pension changes in assumptions, - 3,469,843 3,469,843 expectations 3,469,843 1 Deferred outflows from advanced bond refundings 361,521 319,446 (42,075) 4 (42,075) Total deferred outflows of resources 5,003,361 2,433,273 2,475,348 Total assets and deferred outflows of resources LIABILITIES, DEFERRED OUTFLOWS OF RESOURCES, AND NET POSITION Liabilities: Accounts payable Unearned revenue Current maturities of bond obligations Current portion of accumulated sick leave INTEREST PAYABLE 897,821 20,207 5 877,614 (20,207) Current portion of accrued insurance claims liability BONDS PAYABLE 78,920,000 3,780,000 3 75,140,000 (3,780,000) These accounts show NET PENSION LIABILITY 8,670,809 1 (6,055,217) 14,726,026 6,055,217 on both sets of ACCUMULATED SICK LEAVE 432,677 6 (346,388) 779,065 346,388 statements; 60 day ACCRUED INSURANCE CLAIMS LIABILITY 224,624 64,108 7 160,516 (64,108) portion only on gov't Total liabilities funds statements Deferred inflows of resources 968,318 193,664 1 774,654 (193,664) Total deferred inflows of resources Total liabilities and deferred inflows of resources $ - $ - Net Position: $ NET INVESTMENT IN CAPITAL ASSETS 50,752,174 RESTRICTED FOR: SPECIAL PROJECTS 472,181 CAPITAL PROJECTS/DEBT SERVICE 14,956,958 UNRESTRICTED 233,481 3,386,205 1 3 (3,780,000) (2,880,486) (3,113,967) 42,075 4 1,034 8 7 (64,108) 346,388 6 5 (20,207) 4,493,993 2 2 (1,212,829) 268,838 Total net position $ 2 17,721,643 (17,721,643) Officials 9

Statement of Activities Items in the blue box on Adjustments Page Depreciation and fixed asset additions allocate among functions Bond principal payments and change in accrued interest debt service function Change in KISTA liability district admin function Others instruction function Discuss with your auditor Create the Reconciliations Use the list of entity wide adjustments to create the reconciliations Gov t Funds Balance Sheet to Statement of Net Position Gov t Funds Statement of Revenues, Expenditures, and Changes in Fund balances to Statement of Activities Officials 10

RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION June 30, 2016 Think "BALANCES" Total fund balances governmental funds $ 25,553,248 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not current financial resources and therefore are not reported as assets in governmental funds. The historical cost of the assets is $186,410,991 and the accumulated depreciation is $54,288,820. Deferred outflows are not reported in the governmental funds because they are not current financial resources, but they are reported in the statement of net position. Deferred inflows of resources are not reported in the fund financial statement because they are not due and payable, but they are reported in the statement of net position. Bonds payable are not reported in the governmental funds balance sheet because they are not due and payable in the current period, but they are presented in the statement of net position. The noncurrent portion of accumulated sick leave is not reported in the governmental funds balance sheet because it is not due and payable in the current period, but it is presented in the statement of net position. Interest payable is not reported in the governmental funds balance sheet because it is not due and payable in the current period, but it is presented in the statement of net position. Pension liability is not reported in the governmental funds balance sheet because it is not due and payable in the current period, but it is presented in the statement of net position. Interfund transfers are not reported in the entity-wide statements. This the amount of interfund transfers. 126,122,171 Balance after entry #2 5,003,361 Balance after entries #1 and #4 (774,654) Balance after entry #1 (75,140,000) Balance after entry #3 Balance after entry #6, less 60-day portion (752,893) shown on gov't funds balance sheet: $ 779,065 - $ 26,172 = $752,893 (877,614) Balance after entry #5 (14,726,026) Balance after entry #1 (1,034) Entry #8 The noncurrent portion of accrued insurance claims liability is not reported in the governmental funds balance sheet because it is not due and payable in the current period, but it is presented in the statement of net position. (96,408) Balance after entry #7, less 60-day portion shown on gov't fund balance sheet: $ 160,516 - $ 64,108 = $ 96,408 Total net position governmental activities $64,310,151 Note the balances on the Adjustments page match the balances on the Balance Sheet Reconciliation Except for the two line items where a portion of the total liability is recognized on the gov t funds balance sheet (sick leave and KSBIT liabilities) Officials 11

RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended June 30, 2016 Think "CURRENT YEAR AMOUNTS" Net change in fund balances total governmental funds $ 1,352,359 Amounts reported for governmental activities in the statement of activities are different due to: Governmental funds report capital outlays as expenditures. However, in the statement of net position, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. The effect on net position is the amount by which capital outlays exceeds depreciation in the current period. Depreciation expense (4,493,993) Capital outlays 1,212,829 (3,550,002) Loss on disposal/retirement of assets (268,838) Deferred loss on bond refundings are not reported as expenditures in the governmental funds financial statements but are capitalized and amortized over the life of the related bonds on the statement of activities. This is the amount by which the deferred loss on bond refundings has increased/(decreased). (42,075) The repayment of the principal of long-term debt is shown as expenditures in the governmental funds financial statements at the time the payments are made. However, these payments are shown as a reduction of long-term debt in the statement of net position. 3,780,000 Deferred outflows from pensions. This is the amount by which deferred outflows from pensions has increased/(decreased) 2,475,348 Deferred inflows from pensions. This is the amount by which deferred inflows from pensions has (increased)/decreased. 193,664 Accumulated sick leave is reported as a liability in the statement of net position, but is only reported in the governmental funds financial statements to the extent that the amounts will be paid with available financial resources. This is the amount by which accumulated sick leave has (increased)/decreased. Interfund transfers are not reported in the entity-wide statements. This is the amount of interfund transfers. (1,034) (342,001) 346,388-4,387 (The change in amount reported on gov't funds balance sheet between PY and CY) Insurance claims expense related to the insurance claims liability is recognized in the statement of activities but not in the governmental fund financial statements because it is not paid with existing financial resources. This is the amount by which insurance claims liability has (increased)/decreased. (The change in amount reported 64,108 64,108-0 on gov't funds balance sheet between PY and CY) Pension liability is recognized in the statement of activities but not in the governmental fund financial statements because it is not paid with existing financial resources. This is the amount by which pension liability has (increased)/decreased. (6,055,217) Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds because interest is recognized as an expenditure in the funds when it is due and thus requires the use of current financial resources. In the statement of activities, however, interest expense is recognized as the interest accrues, regardless of when it is due. This is the amount by which accrued interest has (increased)/decreased. 20,207 Change in net position of governmental activities (2,104,643) STATEMENT OF NET POSITION June 30, 2016 ASSETS AND DEFERRED OUTFLOWS OF RESOURCES Governmental Business-Type Activities Activities Total Assets: Cash and cash equivalents 25,127,803 $ 491,931 $ $ 25,619,734 28,964 Investments 28,964 - Accounts Receivable - Taxes 610,010-610,010 Intergovernmental 1,301,899-1,034 interfund amount 1,300,865-1,300,865 Other 124,658 20,670 145,328 Prepaid workers' compensation premiums 18,409-18,409 Inventory - 23,721 23,721 Total capital assets, net of depreciation 126,122,171 451,315 126,573,486 Total assets 153,332,880 987,637 154,320,517 Deferred outflows of resources: Deferred outflows - pension contributions 1,214,072 624,167 1,838,239 Deferred outflows - pension changes in assumptions, expectations 3,469,843-3,469,843 Deferred outflows from advanced bond refundings 319,446-319,446 Total deferred outflows of resources 5,003,361 624,167 5,627,528 Total assets and deferred outflows of resources $ 158,336,241 $ 1,611,804 $ 159,948,045 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION Liabilities: Accounts payable 455,111 $ 37,223 $ $ 492,334 1,143,618 Unearned revenue 1,113,104 30,514 Current maturities of bond obligations 3,860,000-3,860,000 Current portion of accumulated sick leave 167,245-167,245 Interest payable 877,614-877,614 75,140,000 Current portion of accrued insurance claims liability 64,108-64,108 779,065 Noncurrent maturities of bond obligations 71,280,000-71,280,000 Net pension liability 14,726,026 1,818,212 16,544,238 160,516 Noncurrent portion of accumulated sick leave 611,820-611,820 Noncurrent portion of accrued insurance claims liability 96,408-96,408 Total liabilities 93,251,436 1,885,949 95,137,385 Deferred inflows of resources 774,654 122,146 896,800 Total deferred inflows of resources 774,654 122,146 896,800 Total liabilities and deferred inflows of resources 94,026,090 2,008,095 96,034,185 $ $ $ Net Position: Net Investment in Capital Assets 50,982,171 $ 451,315 $ 51,433,486 Restricted for: Special projects 332,268 (1,192,999) (860,731) Capital projects/debt service 9,693,303-9,693,303 Unrestricted 3,302,409 344,359 3,646,768 Total net position 64,310,151 (397,325) 63,912,826 $ $ $ Officials 12

STATEMENT OF ACTIVITIES For the Year Ended June 30, 2016 Net (Expense), Revenue and Program Revenues Changes in Net Position Operating Capital Charges for Grants and Grants and Governmental Business-Type FUNCTIONS/PROGRAMS Expenses Services Contributions Contributions Activities Activities Total Governmental activities: Instruction 45,878,923 1,025 4,351,676 (41,526,222) (41,526,222) - - Supporting services: Students 2,580,878 86,875 244,800 - (2,249,203) - (2,249,203) Instructional staff 5,796,723-549,827 - (5,246,896) - (5,246,896) District administration 1,338,586-126,967 - (1,211,619) - (1,211,619) School administration 4,021,819-381,475 - (3,640,344) - (3,640,344) Business support services 1,718,105-162,965 - (1,555,140) - (1,555,140) Operation and maintenance of facilities 8,599,213 24,991 815,647 - (7,758,575) - (7,758,575) Student transportation 3,679,185-348,976 - (3,330,209) - (3,330,209) Food services 130,120-12,342 - (117,778) - (117,778) Community services 556,580 - - - (556,580) - (556,580) Interest on long-term debt 2,771,464 - - 264,159 (2,507,305) - (2,507,305) Total governmental activities 77,071,596 112,891 6,994,675 264,159 (69,699,871) - (69,699,871) Business-type activities: Food services 4,038,227 1,024,172 2,924,003 17,802 - (72,250) (72,250) Child care 357,248 520,348 - - - 163,100 163,100 Total business-type activities 4,395,475 1,544,520 2,924,003 17,802-90,850 90,850 Total Primary Government 81,467,071 1,657,411 9,918,678 281,961 (69,699,871) 90,850 (69,609,021) General revenues: Property taxes 22,974,958-22,974,958 Motor vehicle taxes 1,570,165-1,570,165 Utilities taxes 3,132,617-3,132,617 Earnings on investment 215,336 3,053 218,389 State grants 38,634,211 38,370,052-38,370,052 Federal grants 126,143-126,143 Loss on disposal of assets entry #2 (268,838) (230,024) (498,862) Other local amounts 1,285,815-1,285,815 1,398,706 Total general revenues 67,406,248 (226,971) 67,179,277 Transfers in (out) 188,980 (192,980) (4,000) Change in net position (2,104,643) (329,101) (2,433,744) Net position - beginning 66,414,794 (67,190) 66,347,604 Net position - ending 64,310,151 (396,291) 63,913,860 Session Leader Susan Barkley, CPA, CSFM Director of Finance Shelby County Public Schools, Kentucky susan.barkley@shelby.kyschools.us Officials 13