2 AGENDA Announcements / Reminders 2014 Audit Season 2015 Financial StatementsNew GASB StatementsFuture Single Audit ChangesAuditing and Reporting TipsDeposit and Investment Issues
3 NCLGIA Summer Conference ANNOUNCEMENTSStaff ChangesDarrus Cofield – Administrative staff - joined us at the beginning of November 2014Jenny Johanns – sends Debt notices, processes LGC-203 reports, currently doing Audit Invoice approvals“Decide to be happy, it is excellent for one’s health.” Voltaire
4 NCLGIA Summer Conference ANNOUNCEMENTSVance HollomanDirector of State & Local Government Finance Division retired on January 16th 2015Now working as finance officer for Apex, NC
5 NC Department of State Treasurer Relocation NC Department of State Treasurer is moving3200 Atlantic Avenue Raleigh, North Carolina
6 NC Department of State Treasurer Relocation All Department of State Treasurer Departments at the same locationCurrently under renovationSecond Quarter 2015Free Visitor Parking
7 2015 NC State Treasurer's Conference NCLGIA Summer Conference2015 NC State Treasurer's ConferenceSave the Date - watch LGC_News listserveRegistration will be available throughNC School of GovernmentHickory – Tuesday, May 12, 2015New Bern – Wednesday, May 13, 2015David Bean, Director of Research and Technical Activities at GASB will be our featured speakerTopics to includeGASB 68 Accounting and Financial Reporting for PensionsFair Value Measurement and ApplicationOPEB Accounting and Financial Reporting
8 NCGFOA Spring Conference NCLGIA Summer ConferenceNCGFOA Spring ConferenceMarch 4-6 at the Sheraton Imperial Hotel & Convention Center – RTPPanel Discussion regarding Pension Attestation Engagement required by Office of State AuditorAuditor and ParticipantsPension Attestation Engagement to confirm employee data
9 2015 Treasurer’s Award for Excellence Applications now available for the 2014 Treasurer's Awards for Excellence in Accounting and Financial Management. To encourage all units of local government in North Carolina to make innovative changes to their accounting and financial management programs, systems, methods, and procedures or improve transparency of financial operations or records.Applications are due by February 16th, 2015Winners announced at GFOA Spring Conference BanquetTreasurer’s Award for Excellence MemoTreasurer’s Award for Excellence Rules
10 Annual Financial Information Report - Reminder NCLGIA Summer ConferenceAnnual Financial Information Report - ReminderAFIR data purposes:National statistics such as GNP by the CensusUsed by State Legislature, State Agencies, Legislative ResearchIf legislature needs the info and nothing is there – does not look good.SOG for Water & Sewer DashboardUsed by League and County Commissioners Assoc.Used by peers for comparative purposesShould be timely & accurate
11 NCLGIA Summer Conference 2014 Audit Review ProcessPositive response from auditors and units.Turnaround was faster.LGC staff availability was improvedAs of February 5th we had received 1,105 FYE auditsMissing – 45 municipalities & 10 countiesAudit review Process is reviewed each year for efficiencyTeam is in process of making updates for 2015 audit review season
12 NCLGIA Summer Conference 2014 Audit Review ProcessSegregation of Duties findingLetters sent to Units regarding FYE 2014 SOD findingInternal Controls Memos currently being updatedMemo 569 and Memo 568New Local Government officials? Please alert our office of changes in …Finance OfficerMayor or Board ChairmanManager
13 NCLGIA Summer Conference 2014 Audit ProcessFYE 2014 County Audit reportsLate program confirmations from DHHS due to implementation of new software caused delay in obtaining information needed for County AuditsIf it happens again, we will work with the County Auditors on 2015 Audit due date.
14 2014 Audit Presentation Issues NCLGIA Summer Conference2014 Audit Presentation IssuesDeferred Inflows Notes – please clarify descriptionsUnearned revenues (prepaid cash receipts) from exchange transactions are liabilities; unearned revenues from nonexchange transactions are deferred inflows of resources. [GASBS 65 ¶53, 67]Memo 949 GASBS 33, Accounting and Financial Reporting for Nonexchange Transactions and GASBS 36 Recipient Reporting for Certain Shared Nonexchange Revenues - if you need assistance with exchange vs. non-exchange classifications.
15 2014 Audit Presentation Issues Exchange transaction vs. Imposed non-exchange transactionFrom GASBS 65, ¶9: Imposed Nonexchange Revenue Transactions - “Deferred inflows of resources should be reported when resources associated with imposed nonexchange revenue transactions are received or reported as a receivable before (a) the period for which property taxes are levied or (b) the period when resources are required to be used or when use is first permitted for all other imposed nonexchange revenues in which the enabling legislation includes time requirements.”Privilege license is exchange transaction: show as a liability, not Deferred InflowsGrants that have been prepaid but for which the substantive or contractual requirements have not been met are liabilities, not deferred inflows
16 2014 Audit Presentation Issues NCLGIA Summer Conference2014 Audit Presentation IssuesTransfers to Discretely Presented Component Unit reported in error (GASB 34 ¶61)Transfers - Descriptions of purpose often too vagueOPEB - Financial Statement liability does not match notes or OPEB Required Supplemental Information (RSI)Pension Note - If pension cost is immaterial, please include a statement explaining that this was the reason that an actuarial study was not performed. Deposits Note - §159-30(b) Certificates of Deposit are allowable in the form of Time Deposits. CDs are not considered an investment and should be included in Deposits note, not listed separately as an investment.
17 2014 Audit Presentation Issues NCLGIA Summer Conference2014 Audit Presentation IssuesLiabilitiesLiabilities payable from Restricted Assets not being broken out separately / identified correctly.Example: Restricted Cash - loan or bond proceeds likely related to capital project** Not including Liabilities payable from Restricted Assets when appropriate, can have a significant affect on water & sewer ratio’s
18 2015 Audit Contract changes Primary Government – Discretely Presented Component Unit (DPCU)DPCU (e.g. Tourism Development Authority) – legally separate Public Authority with separate board: Memo DPCU. Annual Audit required but DPCU’s Board decides not to issue separate financial statementsSeparate Fee / Signature Pages for each legally separate Unit including separate Pre-Audit certificatePrimary Government Board Chairman or MayorBoard Chairman of TDAIf Tourism Development Authority issues separate financial statements, separate Audit contract is required
19 2015 Audit Contracts / Invoices Submit all audit contracts through the Leapfile portalInclude addresses for parties to receive contract approval in portal message boxContract approval is bycurrently Steven Holmberg is contract reviewer – Darrus Cofield will soon be assistingSend Invoices via –Approved stamped invoice sent to auditor bycurrently Jenny Johanns sends approved invoicesUntil 2015 audit contract form is availableUse of 2014 form is fine until the 2015 form is published - please use the form most currently published on the Department of State Treasurer website
20 2015 Illustrated Financial Statements 2015 Audit2015 Illustrated Financial StatementsBeing updated for GASB Statement 68ClarifyingCleaning upGoal is to have Illustrated Statement samples prepared by NC State Treasurer’s Conference in May 2015.
21 LOCAL GOVERNMENT DEBT ISSUANCE NCLGIA Summer ConferenceLOCAL GOVERNMENT DEBT ISSUANCEIf you are considering issuance of Debt – please call us sooner rather than laterBegin conversations with the SLGFD Debt Management Section at least 2 to 3 months prior to your anticipated LGC meeting to begin discussions if you expect to issue debt.Begin discussions ahead of time with your auditor if you are planning issuance of Debt later in the year.Mark your calendar and notify Tim Romocki and your auditor if issuing debt in November or December of 2015, or January of 2016.
22 AUP –Testing eligibility for State funded programs NCLGIA Summer ConferenceAUP –Testing eligibility for State funded programsAll NC Counties and certain District Health Agencies. For District Health Agencies the State Auditor and/or Local Auditor selects to test a certain program, such as WIC. Local Auditors will likely be relied upon by the Office of State Auditors this year to test eligibility for selected major programs of the State of NC. Notification of these programs most likely will be available the first week in May.Office of State Auditors and LGC staff appreciate cooperation of local auditors in the timely issuance of the Program eligibility reportsPrograms tested For YE June 30, 2014, Medicaid, Children’s Health Insurance Program (NC Health Choice), Temporary Assistance to Needy Families (TANF), Woman’s Infants and Children’s Special Supplemental Nutrition Program (WIC), and Adoption Assistance.
23 GASBS 68 – Financial Report for Pensions Effective years ending 6/30/2015The Department of State Treasurer, the Office of State Controller, Office of State Auditor, and the State’s have worked together to guide implementation of GASB 68.You will have the data you and your auditors need to meet your requirements under the standardsLaw Enforcement Officers Separation AllowanceNot affected unless in an irrevocable trust as defined by GASB
24 AICPA GUIDANCE ON AUDITING PENSION DATA NCLGIA Summer ConferenceAICPA GUIDANCE ON AUDITING PENSION DATAAudit of Census Data: attest engagement separate from the annual financial auditAuditor comfort with pension numbers and disclosuresOSA chooses sample of participant employers each year for census data testing using risk based approach.Data being tested on a calendar year basis to coincide with the valuation of the Pension PlansLGC Memo : GASB 67 and GASB 68 – for more informationDST Webpage dedicated to GASB 67 and 68, Webpage - GASB 67 and GASB 68 provides additional guidance and resources.Sharon Edmundson (919)Preeta Nayak (919)
25 GASB Other Post Employment Benefits (OPEB) NCLGIA Summer ConferenceGASB Other Post Employment Benefits (OPEB)Improve accountability and transparency of OPEB financial reporting regarding the financial effects of employers’ commitments and actions related to OPEBImprove the usefulness of information for decisions or judgments of the various users of the general-purpose external financial reports of governmental employers and OPEB plansEvery unit will have to determine how best to approach implementation since almost all OPEB plans are single employer plansJune 2015 GASB expects to issue final statements
26 GASB - Fair Value Measurement & Application NCLGIA Summer ConferenceGASB - Fair Value Measurement & ApplicationPurpose: Review and consider alternatives for the further development of (1) the definition of fair value, (2) the methods used to measure fair value, (3) the applicability of fair value guidance to investments and other items currently reported at fair value, and (4) potential disclosures about fair value measurements. Current Stage: Exposure Draft Redeliberations: The Board re-deliberated issues raised by respondents to the Exposure Draft, Fair Value Measurement and Application, at its September, November, and December 2014 meetings and October 2014 teleconference meeting February 2015 – GASB expects to issue final Statement
27 Future Federal Single Audit requirements Effective date will be for years ending June 30, 2016US OMB has announced changes to Federal Single Audit requirements for local governments and public authorities that receive Federal Financial Assistance.The amount to determine if a Federal Single Audit is required will be $750,000 of expenditures.Among the other changes: minimum threshold to determine major programs will be $750,000Total amount of financial assistance that is required to be audited reduced to forty percent (40%) and twenty (20%) for low-risk auditees.
28 State Single Audit requirements DST is considering changes to the State Single Audit Act that typically occurs when the Federal changes their thresholds.
29 AUDITING AND REPORTING TIPS NCLGIA Summer ConferenceAUDITING AND REPORTING TIPSStatutory limits on Transfers from Electric Funds for Eastern Municipal Power Agency – GS 159B-39Effective July 1, 2014 – Permits the following:Payments in Lieu of taxes based on property taxes – presented as transfers in both fundsReimbursements treated as reduction in expendituresOther transfers will be capped at the greater of:Three percent (3%) of gross electric capital assets at the end of the preceding fiscal yearFive percent (5%) of the gross annual revenues of the electric system for the preceding fiscal year
30 DEPOSIT AND INVESTMENT ISSUES LGC-203 ReportsWere due January 25thAs of February % - approx. 778 of 1200 have been receivedJune 2014 cycle - 97% or 1165 reports were receivedLate letters to go out the 4th week of FebruaryNot required for NC Charter SchoolsABC - LGC-203 report forms are accessed at the NC ABC Commission Website:If you cannot find your name or bank, please call Becky
31 DEPOSIT AND INVESTMENT ISSUES 8 Units with Investment Violations as of June 30, 2014 – the issues were…….Insufficient collateralization (Market Value) for accounts in non-pooling banks as of report date.Credit Union DepositsAnnuity InvestmentFNMA and FHLMC REMIC Investments – No authority for moneys of units of local governments to be invested in themAG Opinion
32 DEPOSIT AND INVESTMENT ISSUES Brokered CD Investments issued in out of state banks - violation of §159-30(b) or (b1)CD’s in form of Time Deposits, are not considered an investmentCorporate CD’s are not eligible in North CarolinaHas to be the Unit depositing the money into the bank, not the BrokerMoney Market deposits with FDIC insurance reported as deposits different from Money Market Funds which are not FDIC insured and generally are not an allowable investment
33 DEPOSIT AND INVESTMENT ISSUES NCLGIA Summer ConferenceDEPOSIT AND INVESTMENT ISSUESSEC Municipal Advisor Rules – Dodd/Frank BillPrimarily about issuing debtRelates to investment of proceeds as wellNormal brokers cannot advise you if bond proceeds are included with certain exceptions:Issue RFP to 3 brokers specifying date range, security type, and time for quotes to be returnedUtilize an independent municipal advisor when you come to the market
34 DEPOSIT AND INVESTMENT ISSUES NCLGIA Summer ConferenceDEPOSIT AND INVESTMENT ISSUESSEC Municipal Advisor Rules – Dodd/Frank BillInvestment of new debt issues will be handled by your trustees or financial advisors but this rule may catch you with left over bond proceeds from older issues … you must certify to broker that no bond proceeds are included in your funds to be investedIf no bond proceeds – business as usualIf bond proceeds comingled then brokers can only show you market information - an inventory with no advice
35 DEPOSIT AND INVESTMENT ISSUES Be cautious with investments offered with rates of return that are significantly higher than what appears to be available in the marketsSafety, Liquidity, then YieldAvoid any investment you do not understandQuestions – call our office at
36 ANNOUNCEMENTS / REMINDERS NCLGIA Summer ConferenceANNOUNCEMENTS / REMINDERSBest way to stay informed is through listserv:LGC_NewsRegister multiple people on your staff in case you are out of the office.Please give Sara or Becky a business card or send us an if you wish to be registered.
37 Investment Questions? Becky Dzingeleski (919) 807-2396 Sara Shippee (919)
38 Thank you!Together , we can build and maintain a fiscally strong and prosperous North Carolina.