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BY: MATT HJELM, CPA, CFE KIM DARE, CPA, CFE GALUSHA, HIGGINS, & GALUSHA, PC Management’s Discussion and Analysis: What you need to say.

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Presentation on theme: "BY: MATT HJELM, CPA, CFE KIM DARE, CPA, CFE GALUSHA, HIGGINS, & GALUSHA, PC Management’s Discussion and Analysis: What you need to say."— Presentation transcript:

1 BY: MATT HJELM, CPA, CFE KIM DARE, CPA, CFE GALUSHA, HIGGINS, & GALUSHA, PC Management’s Discussion and Analysis: What you need to say

2 The Key Points Introduction Year to year comparisons Analysis of financial position  Discussion of the basic financial statements  Condensed GW financial information  Analysis of fund activities Analysis of budget to actual variations Description of capital asset and debt activities Description of known facts or conditions that are expected to have a significant affect on operations

3 Introduction Who wrote the MD&A? What is the purpose of the MD&A?

4 Year to Year Comparison – The Highlights Emphasize the current year! Discuss both positive and negative aspects of the year’s operations.  Reserves  Cash flows  Tax items  Mill levies  Valuation  Capital Improvements  Other postemployment benefits  Multi-district cooperative agreements

5 The Basic Financial Statements Discussion on the district-wide financial statements  Accrual method of accounting  Be sure to use up to date terminology  Ask the auditor Check your numbers and percentages if you use them! Keys to keeping the reader’s attention…… sure  Give a general overview of what you are discussing  Be descriptive but concise  Keep it simple

6 The Basic Financial Statements Statement of Net Position  General Overview  Assets, Liabilities and Net Position Makeup of categories  A.The Statement of Net Position on Page 13 shows the assets, liabilities, and the net position of the school district. The statement categorizes assets to show that some assets are very liquid, such as cash and cash equivalents. Some assets are restricted for certain purposes or reserved for emergencies and cash flow purposes. Some assets are invested in fixed or capital assets, such as buildings, equipment and other long-lived property; and some assets are available to fund budgets of the following year. Assets exceed liabilities by $X,XXX,XXX as of June 30, For current year net position, capital assets and restricted net position compose 90% of the total of net assets and 10% are unrestricted or liquid. Last year capital assets and restricted net assets composed 90% of the total net assets and unrestricted or liquid assets comprised 10% of the total. This allocation has remained the same for the last four years. Deferred inflows and outflows if you have them

7 The Basic Financial Statements Statement of Activities  Discussion on revenue types  General  Program-specific  General overview of expenditure activity

8 Significant Fund Activities Discuss the major funds presented in the financial statements  How to determine major funds  Proprietary funds if you have them  Fiduciary responsibilities i.e. extracurricular accounts  Refer to the schedule of extracurricular activity Method of accounting  Governmental funds – modified accrual  Proprietary and Fiduciary funds – Full accrual Refer to the reconciliations included in the financial statements to determine what makes up the differences between the district-wide financial statements and the fund financial statements

9 Condensed Financial Information Keyword here is condensed! Summarize the district-wide statements only Make sure you update terminology if there has been guidance changes  Ask your auditor about this

10 Condensed Financial Information Statement of Net Position

11 Condensed Financial Information Statement of Activities

12 Budget to Actual Results Discuss any changes between the original, approved budget and the final budget  General description for any modifications Highlight any large variances between final budgeted amounts and the actual amounts for the year

13 Capital Assets and Debt Activity Capital Assets  Annual balance in each category i.e. land, buildings, etc.  General information on capital additions or disposed assets  Annual depreciation expense Debt Activity  Type of Debt i.e. Bonds, Capital Leases, Intercap loans  Include general information i.e. Maturity dates and interest rates  Outstanding amounts at year end Make sure to include your OPEB information  Note: Will include pension liability information starting in FY15 – Talk to your auditor if you unaware of this change

14 Currently Known Information Make sure to highlight key changes that have happened or are expected to happen in the near future  Mill levies  Changes to tax base or valuations  Include significant items such as tax protests  Enrollment trends  Changes to state/federal funding

15 Contact Information for the District District Superintendent District Clerk/Business Manager Mailing/Physical Address Phone Number

16 Helpful References OPI  Finance & Grants  Accounting GASB34 Tab Model MD&A MD&A Checklist Samples

17 Background on Presenters Firm: Founded in offices Audit clients include 20+ school districts and education co-ops as well as other governmental entities Matt Hjelm: Graduated MSU 6+ years experience auditing governments including schools, cities, Indian tribes Kim Dare: Graduated MSU-B 15+ years experience auditing governments including schools, cities, Indian tribes Both licensed in the State of Montana and Certified Fraud Examiners

18 Questions Contact: or


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