Examiners Update to County Administrators Presented by: James E. Hall, CPA Director County Audit...

Examiners Update to County Administrators

Presented by: James E. Hall, CPA

Director County Audit Division

Examiners of Public Accounts

State of Alabama

Disclaimer

This information was presented to the Association of County Commissions of Alabama’s (ACCA) Annual Conference on May 13, 2015.

This presentation represents the audit position of the Department of Examiners of Public Accounts as of that date.

Objectives…

GASB Statements

Common Problems

Financial Statements

GASB Updates

GASB FY2014

Statement No 67 – Financial Reporting for Pension Plans – An Amendment to GASB Statement No. 25

Statement No 70 – Accounting and Financial Reporting for Nonexchange Financial Guarantees

Statement No 70 – Accounting and Financial Reporting for Nonexchange Financial Guarantees

Applies to governments who guarantee the financial obligations of others in a nonexchange transaction

Other entities may include governments or authorities, not-for-profits, private companies and individuals

Must recognize a liability if it is more likely than not (more than 50%) that the government will be required to make a payment on the guarantee.

GASB 70Note Disclosures

Regardless of whether the governmental entity determines that it is more likely than not that a payment will be required, GASB requires the entity to make certain disclosures for all nonexchange financial guarantees.

A description of the nonexchange guarantee

The legal authority and limits for extending the guarantee and the types of obligations guaranteed

Relationship between guarantor and the entity issuing the obligations that are guaranteed

Description of recovery arrangements

Length of time of the guarantees

Total amounts of all guarantees extended that are outside of the reporting date.

GASB 70 Note Disclosure

In addition to previous disclosures, governments that have recognized a liability or made payments during the year there are additional disclosures

Description of changes in recognized liabilities, including beginning and end of year balances, increases, decreases and adjustments

Discussion of timing of recognition & measurement

Amount of outstanding guarantees

Amount of commitments to extend guarantees

Cumulative amount paid towards outstanding guarantees

Amounts expected to be recovered

GASB 70Note Disclosures

Governments with obligations guaranteed by another entity in a nonexchange transactions should disclose the following:

Name of entity providing the guarantee

Amount of obligations guaranteed

Length of time of the guarantee

Amount paid by guarantor during the audit period

Cumulative amount paid by guarantor on outstanding obligations.

Description of requirements to repay

Outstanding amounts to be repaid to the guarantor

GASB FY2015

Statement No. 68 – Accounting and Financial Reporting for Pensions

Statement No. 69 – Government Combinations and Disposals of Government Operations

Statement No. 68 – Accounting and Financial Reporting for Pensions

Must report the net pension liability on the government-wide and enterprise fund type financial statements.

GASB Statement 69Government Combinations and Disposals of Government Operations

GASB Statement 69Government Combinations and Disposals of Operation

Statement identifies 3 types of combinations

Merger - assets and liabilities are recognized at their carrying value as of the merger date

Acquisition - assets and liabilities are recognized at acquisition cost as of the acquisition date, except for

Employee benefit arrangements

Landfill and pollution remediation liabilities

Investments and derivatives reported at fair value

Deferred Outflows and Deferred Inflows

Transfer of Operations – assets and liabilities are recognized at their carrying value as of the merger date

GASB Statement 69Government Combinations and Disposals of Operation

Merger – combination of legally separate entities with no significant exchange of consideration and either

2 or more governments cease to exist as entities and are combined to form one or

A legally separate entity ceases to exist and the operations are absorbed into a continuing government

GASB Statement 69Government Combinations and Disposals of Operation

Acquisitions – combination in which a government acquires another entity or operations of another entity in exchange for significant consideration

Transfer of Operations – Involves combination of operations rather and legally separate entities in which no significant consideration is exchanged

Can be a transfer of operations to a continuing government or a newly formed government.

16 Common Problems and Ways to Correct

17 Cash and Investments

Not making deposits in a timely manner.

Not performing bank reconciliations

Investing in items not authorized by the Code of Alabama 1975, Section 11-8-11 and 11-81-21

Proper Procedures - Depositing

Funds should be deposited in a timely manner; daily – recommended.

If deposit cannot be made before the bank closes, a locked night deposit bag should be used to secure funds in the bank’s night depository.

Pre-printed, duplicate deposit slips containing the account name and bank account number should be used.

Proper Procedures - Depositing Checks should be endorsed with “For Deposit Only”,

along with account name and bank account number.

The deposit slip should contain the receipt numbers of the funds deposited.

The deposit date and deposit amount should be noted on the last receipt included in the deposit.

Proper Procedures - Depositing Daily receipts should be deposited intact.

Do not cash checks with the funds received.

Do not use cash receipts for change cash.

Do not use cash received for expenses.

Do not use correction fluid or erase mistakes on deposit slips.

The bank should authenticate the duplicate deposit slip at the time of deposit and be retained for audit.

21 Receivables

Not recording receivables for amounts earned during the fiscal year but not received until the next fiscal year.

If in doubt of year end receivables, it is OK to make an estimate!

22 Inventories

Commission not recording any inventories when material amounts are on hand. Examples include road department supplies, gas, water treatment supplies, etc.

23 Capital Assets

Not performing a physical inventory at least once every 2 years (federal requirement)

Amounts recorded as Capital Outlay do not agree with additions to Capital Assets

24 Liabilities

Failure to record debt refundings or new debt issued

Improperly recording principal and interest payments

Payables subsidiary listing not agreeing with general ledger

Due to / Due From not agreeing

25 Revenues/ Receipts

Not reporting all income earned or received during the year.

Receipt books were not retained or made available for review.

Voided Receipts not being maintained.

26 Revenues/ReceivablesProper Procedures

Voided receipts must be retained in the receipt book.

Do not use correction fluid or erase mistakes.

Secure funds received

Do not cash checks with funds received

No money should be left in office overnight

All receipts books should be logged and secured when not in use.

27 Payroll / Personnel

Not reporting vehicle usage as income on individual’s W-2 (IRS Pub 13b)

Personnel files not being updated.

Promotions/raises not indicated in files

Expenditures

Expenditures did not contain the proper supporting documentation.

Expenditures were not properly coded in the accounting system.

Failure to follow the Alabama Competitive Bid Law and/or the Alabama Public Works Law

Transfers In / Transfers Out not agreeing

Proper Procedures - Expenditures Do not sign blank checks – must contain payee

name and amount.

Do not pay for items in advance of receipt of materials, supplies, or equipment.

Invoices and supporting documents should be provided with the check to be signed.

Invoices should be cancelled (marked PAID) when the check is signed.

Proper Procedures - Expenditures

Vendors should be paid in a timely manner to avoid late fees.

Checks should be used in numerical order.

Checks must be secured at all times.

Voided checks must be retained for audit.

Checks outstanding for more than 60 days should be investigated.

Bid Law

Goods and Services in excess of $15,000 not being bid in accordance with Code of Alabama 1975, Section 41-16-50.

Be very careful using credit cards and purchasing cards – still subject to bid law!

Not following all aspects of public works law

32 Contact InformationManagers

Robin Lakey – Madison; Colbert; Franklin; Marion; Winston; Lawrence

Randy O’Bannon – Lauderdale; Limestone; Jackson; Morgan; Marshall; Cullman

Gwyn Griggs – DeKalb; Etowah; Cherokee; Calhoun; Cleburne

Whitney Atchison – Jefferson; St Clair; Blount; Walker; Fayette

Nikki Morrison – Shelby; Talladega; Clay; Coosa; Randolph; Tallapoosa

Shelley Patrenos – Lamar; Pickens; Tuscaloosa; Sumter; Greene; Hale

33 Contact InformationManagers

Emily Tyler – Bibb; Perry; Dallas; Marengo; Choctaw

Teresa Dekle – Chilton; Autauga; Elmore; Lowndes; Montgomery

Tammy Shelley – Chambers; Lee; Macon; Russell; Barbour

Brian Wheeler – Mobile; Baldwin; Washington; Monroe

Christina Smith – Clarke; Wilcox; Conecuh; Escambia

Lynn Otto – Butler; Crenshaw; Covington; Coffee; Geneva

Cherie Raffle – Houston; Henry; Dale; Pike; Bullock

34Managers InformationEmail is First Name.Last Name@Examiners.Alabama.Gov

Robin Lakey (256-314-5783)

Randy O’Bannon (256-532-3509)

Gwyn Griggs (256-927-8649)

Whitney Atchison (205-325-5680)

Nikki Morrison (256-215-3041)

Shelley Patrenos (205-652-2285)

Emily Tyler (334-295-2241)

Teresa Dekle (334-832-7713)

Tammy Shelley (334-619-1517)

Brian Wheeler (251-937-0338)

Christina Smith (251-867-0296)

Lynn Otto (334-347-8820)

Cherie Raffle (334-677-4768)

Contacting the Department

• Located in the Gordon Persons Administrative Building at 50 North Ripley Street, Room 3201 in Montgomery, AL

• Mailing Address – P. O. Box 30225 Montgomery, AL 36130-

2251

• Phone – 334-242-9200

• Fax – 334-242-1775

• Email – info@examiners.alabama.gov

• Website – www.examiners.alabama.gov

Hotline

To report Fraud, Waste & Abuse:

1-844-56F-RAUD

1-844-563-7283

Email: Report.Fraud@Examiners.Alabama.Gov

Other Issues

Financial Statements…

38 Questions