LGC Update - NC Local Government Investment Association

Report
LGC UPDATE
2015 NCLGIA – Winter Conference
Sara Shippee and Becky Dzingeleski
February 9, 2015
AGENDA
• Announcements / Reminders
• 2014 Audit Season
• 2015 Financial Statements
• New GASB Statements
• Future Single Audit Changes
• Auditing and Reporting Tips
• Deposit and Investment Issues
2
ANNOUNCEMENTS
• Staff Changes
oDarrus Cofield – Administrative
staff - joined us at the beginning of
November 2014
oJenny 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
3
ANNOUNCEMENTS
Vance Holloman
Director of State &
Local Government
Finance Division
retired on
January 16th 2015
Now working as
finance officer for
Apex, NC
4
NC Department of State Treasurer Relocation
NC Department of State
Treasurer is moving
3200 Atlantic Avenue
Raleigh, North
Carolina
5
NC Department of State Treasurer Relocation
 All Department of State Treasurer
Departments at the same location
 Currently under renovation
 Second Quarter 2015
 Free Visitor Parking
6
2015 NC State Treasurer's Conference
Save the Date - watch LGC_News listserve
Registration will be available through
NC School of Government
Hickory – Tuesday, May 12, 2015
New Bern – Wednesday, May 13, 2015
David Bean, Director of Research and Technical Activities at
GASB will be our featured speaker
Topics to include
GASB 68 Accounting and Financial Reporting for
Pensions
Fair Value Measurement and Application
OPEB Accounting and Financial Reporting
7
NCGFOA Spring Conference
• March 4-6 at the Sheraton Imperial Hotel &
Convention Center – RTP
http://www.sheratonrtp.com/
• Panel Discussion regarding Pension Attestation
Engagement required by Office of State Auditor
o Auditor and Participants
8
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, 2015
Winners announced at GFOA Spring Conference Banquet
Treasurer’s Award for Excellence Memo
Treasurer’s Award for Excellence Rules
9
Annual Financial Information Report - Reminder
• AFIR data purposes:
o National statistics such as GNP by the Census
o Used by State Legislature, State Agencies, Legislative
Research
o If legislature needs the info and nothing is there –
does not look good.
o SOG for Water & Sewer Dashboard
o Used by League and County
Commissioners Assoc.
o Used by peers
for
comparative purposes
o Should be timely & accurate
10
2014 Audit Review Process
•
Positive response from auditors and units.
Turnaround was faster.
LGC staff availability was improved
As of February 5th we had received 1,105 FYE
2014 audits
oMissing – 45 municipalities & 10 counties
• Audit review Process is reviewed each year for
efficiency
• Team is in process of making updates for 2015 audit
review season
11
2014 Audit Review Process
•
Segregation of Duties finding
Letters sent to Units regarding FYE 2014 SOD finding
Internal Controls Memos currently being updated
Memo 569 and Memo 568
• New Local Government officials? Please alert our office
of changes in …
Finance Officer
Mayor or Board Chairman
Manager
12
2014 Audit Process
• FYE 2014 County Audit reports
Late program confirmations from DHHS due to
implementation of new software caused delay in
obtaining information needed for County Audits
If it happens again, we will work with the
County Auditors on 2015 Audit due date.
13
2014 Audit Presentation Issues
•
Deferred Inflows Notes – please clarify descriptions
Unearned 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.
14
2014 Audit Presentation Issues
Exchange transaction vs. Imposed non-exchange transaction
From 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 Inflows
•
Grants that have been prepaid but for which the substantive or
contractual requirements have not been met are liabilities, not
deferred inflows
15
2014 Audit Presentation Issues
•
Transfers to Discretely Presented Component Unit
reported in error (GASB 34 ¶61)
•
•
Transfers - Descriptions of purpose often too vague
•
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.
OPEB - Financial Statement liability does not match
notes or OPEB Required Supplemental Information (RSI)
16
2014 Audit Presentation Issues
Liabilities
Liabilities 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
17
2015 Audit Contract changes
Primary Government – Discretely Presented
Component Unit (DPCU)
o DPCU (e.g. Tourism Development Authority) – legally
separate Public Authority with separate board: Memo
2014-08 DPCU. Annual Audit required but DPCU’s
Board decides not to issue separate financial statements
o Separate Fee / Signature Pages for each legally
separate Unit including separate Pre-Audit certificate
o Primary Government Board Chairman or Mayor
o Board Chairman of TDA
o If Tourism Development Authority issues separate
financial statements, separate Audit contract is
required
18
2015 Audit Contracts / Invoices
•
Submit all audit contracts through the Leapfile portal
o Include email addresses for parties to receive contract
approval in portal message box
o Contract approval is by email
currently Steven Holmberg is contract reviewer – Darrus
Cofield will soon be assisting
•
Send Invoices via Email – [email protected]
o Approved stamped invoice sent to auditor by email
currently Jenny Johanns sends approved invoices
•
Until 2015 audit contract form is available
o Use 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
19
2015 Audit
2015 Illustrated Financial
Statements
o Being updated for GASB Statement 68
o Clarifying
o Cleaning up
o Goal is to have Illustrated Statement
samples prepared by NC State
Treasurer’s Conference in May 2015.
20
LOCAL GOVERNMENT DEBT ISSUANCE
• If you are considering issuance of Debt –
please call us sooner rather than later
o Begin 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.
oBegin 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.
21
AUP –Testing eligibility for State funded programs
o All NC Counties and certain District Health
Agencies.
o For District Health Agencies the State Auditor
and/or Local Auditor selects to test a certain
program, such as WIC.
o 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.
o Notification of these programs most likely will be
available the first week in May.
22
GASBS 68 – Financial Report for Pensions
•
Effective years ending 6/30/2015
The 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.
o You will have the data you and your auditors need
to meet your requirements under the standards
o Law Enforcement Officers Separation Allowance
o Not affected unless in an irrevocable trust as
defined by GASB
23
AICPA GUIDANCE ON AUDITING PENSION DATA
•
•
•
Audit of Census Data: attest engagement separate from the annual
financial audit
o Auditor comfort with pension numbers and disclosures
o OSA chooses sample of participant employers each year for census
data testing using risk based approach.
o Data being tested on a calendar year basis to coincide with the
valuation of the Pension Plans
LGC Memo 2015-06: GASB 67 and GASB 68 – for more information
DST Webpage dedicated to GASB 67 and 68, Webpage - GASB 67 and
GASB 68 provides additional guidance and resources.
Sharon Edmundson [email protected] (919) 807-2380
Preeta Nayak [email protected] (919) 807-2393.
24
GASB Other Post Employment Benefits (OPEB)
Improve accountability and transparency of OPEB financial
reporting regarding the financial effects of employers’
commitments and actions related to OPEB
Improve the usefulness of information for decisions or
judgments of the various users of the general-purpose external
financial reports of governmental employers and OPEB plans
Every unit will have to determine how best to approach
implementation since almost all OPEB plans are single
employer plans
June 2015 GASB expects to issue final statements
25
GASB - Fair Value Measurement & Application
Purpose: 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 redeliberated 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
26
Future Federal Single Audit requirements
Effective date will be for years ending June 30, 2016
US 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 $750,000
 Total amount of financial assistance that is required to be audited
reduced to forty percent (40%) and twenty (20%) for low-risk
auditees.
27
State Single Audit requirements
• DST is considering changes to the State Single
Audit Act that typically occurs when the Federal
changes their thresholds.
28
AUDITING AND REPORTING TIPS
• Statutory limits on Transfers from Electric Funds for
Eastern Municipal Power Agency – GS 159B-39
o Effective July 1, 2014 – Permits the following:
o Payments in Lieu of taxes based on property taxes –
presented as transfers in both funds
o Reimbursements treated as reduction in expenditures
o Other transfers will be capped at the greater of:
o Three percent (3%) of gross electric capital assets
at the end of the preceding fiscal year
o Five percent (5%) of the gross annual revenues of
the electric system for the preceding fiscal year
29
DEPOSIT AND INVESTMENT ISSUES
•
LGC-203 Reports
 Were due January 25th
 As of February 5 - 65% - approx. 778 of 1200 have been received
 June 2014 cycle - 97% or 1165 reports were received
 Late letters to go out the 4th week of February
 Not required for NC Charter Schools
 ABC - LGC-203 report forms are accessed at the NC ABC Commission
Website: http://abc.nc.gov/boards/reports.aspx?folder=1
 If you cannot find your name or bank, please call Becky
30
DEPOSIT AND INVESTMENT ISSUES
•
8 Units with Investment Violations as of
June 30, 2014 – the issues were…….
o Insufficient collateralization (Market Value) for
accounts in non-pooling banks as of report date.
o Credit Union Deposits
o Annuity Investment
o FNMA and FHLMC REMIC Investments – No
authority for moneys of units of local governments to
be invested in them
• AG Opinion
31
DEPOSIT AND INVESTMENT ISSUES
o 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
investment
• Corporate CD’s are not eligible in North Carolina
• Has to be the Unit depositing the money into the bank,
not the Broker
o Money 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
32
DEPOSIT AND INVESTMENT ISSUES
• SEC Municipal Advisor Rules – Dodd/Frank Bill
o Primarily about issuing debt
o Relates to investment of proceeds as well
o Normal brokers cannot advise you if bond
proceeds are included with certain exceptions:
oIssue RFP to 3 brokers specifying date range,
security type, and time for quotes to be
returned
oUtilize an independent municipal advisor
when you come to the market
33
DEPOSIT AND INVESTMENT ISSUES
• SEC Municipal Advisor Rules – Dodd/Frank Bill
o Investment 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 invested
oIf no bond proceeds – business as usual
oIf bond proceeds comingled then brokers can
only show you market information - an
inventory with no advice
34
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 markets
• Safety, Liquidity, then Yield
• Avoid any investment you do
not understand
• Questions – call our office at 919-807-2381
35
ANNOUNCEMENTS / REMINDERS
Best way to stay informed is through listserv:
LGC_News
Register 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 email if you wish to be registered.
36
Investment Questions?
o Becky Dzingeleski
(919) 807-2396
[email protected]
o Sara Shippee
(919) 807-2356
[email protected]
37
Thank you!
Together , we can build and maintain a fiscally strong and prosperous North Carolina.
www.NCTreasurer.com

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