Financial Reporting

1. Financial Reporting

2. Overview Financial Statements Financial Position Summary of Significant Accounting Policies (SSAP) MD&A Investments Pensions Program Revenue Segment Reporting Internal Service Funds Internal Financial Reporting Odds & Ends

3. Financial Statements GAAP MD&A & Basic financial statements Government wide statements Fund level statements Notes to financial statements

4. Financial Statements GAAP Required supplementary information (RSI) Budget – actual comparison Option to report in basic financial statements General Fund & major Special Revenue Funds with legally adopted budgets Reconcile budget basis to GAAP Modified approach Maintain up to date inventory Condition assessment – every three years Annual amount to maintain condition Document preservation level – current level or better

5. Financial Statements GAAP Required supplementary information (RSI) Pensions Schedule of employer contributions Schedule of funding progress OPEB Schedule of employer contributions Schedule of funding progress

6. Financial Statements Not GAAP CAFR Supplemental information Combining statements Nonmajor funds Component units Major & nonmajor funds

7. Financial Statements Government wide financial statements Economic resources & full accrual Net assets, revenues, expenses Governmental & Business-type Activities Fiscal & operational accountability Interfund balances eliminated if appropriate Same governmental or business unit Fiduciary funds EXCLUDED

8. Financial Statements Fund level financial statements Governmental funds Fund balance, revenues, expenditures, other sources & uses Proprietary funds Net assets, operating & nonoperating Fiduciary funds Fiscal accountability Required to reconcile to government-wide financial statements (FS) Fund balance to net assets Change in fund balance to change in net assets

9. Component units (CU) are reported by: Discrete presentation Separate column Separate column for major CUs Nonmajor CUs aggregated Blended presentation CU’s financial information included with appropriate funds of the primary government (PG) Financial Statements

10. Financial Position Financial Position Focus on existing resources/claims as of 9/30/xxxx Focus of general purpose external financial reporting Statement of Net Assets Government wide Proprietary & fiduciary funds Balance Sheet Governmental funds

11. Summary of Significant Accounting Policies (SSAP) Disclosure of accounting policies required by GAAP … includes: Selection of accounting treatment when choices available Accounting principles & methods peculiar to government Measurement focus & basis of accounting Unusual/innovative GAAP applications

12. Management’s Discussion & Analysis (MD&A) Management’s Discussion & Analysis May/may not be in scope of FS audit Narrative introduction overview & analysis Focuses on relationship of governmental funds & governmental activities as reported in government wide statements

13. Investments Report investments at fair value Governmental funds Proprietary funds Fiduciary funds Land & other real estate held by endowments

14. Investments Report investments at fair value: All funds (Governmental, Proprietary, Fiduciary) GASB # 52 - Land & other real estate held as investments by endowments Establishes reporting standards “Fair value” Methods & assumptions used to determine it Changes = investment income GASB # 53 – Accounting & Financial Reporting for Derivative Instruments Extensive disclosure requirements: Instrument type (swap, lock ,option ,cap ,collar etc.) Disclose objectives, terms & risks Disclose methods & assumptions used to determine “fair value” 14

15. Pensions Net Pension Obligation (NPO) Positive NPO occurs when employer fails to fully fund annual required contribution (ARC) Report as long term liability in government-wide statements Negative NPO occurs when ARC is overfunded Report as asset in government-wide statements Debt issued to fund ARC reduces NPO

16. OPEB Disclose in notes: Description of benefits Implicit subsidy Explicit subsidy Description of significant accounting policies Funding policy Funding status OPEB cost & net OPEB obligation* Actuarial assumptions (major) * Difference between amounts expensed & contributions made/benefits paid

17. Program Revenues Taxes do not qualify Even if voted/restricted for specific purpose Grants Operating Capital Reimbursement type grants qualify When restricted to specific program Charges for services

18. Segment Reporting Segment Disclosure Footnotes Required when revenue backed debt is outstanding Not required for segments that are major enterprise funds Key factor in condensed financial statements

19. Internal Service Funds Incorporated into government wide statement as part of the governmental activities Business type activities if most customers, etc. from proprietary funds Revenues = “Billings to Departments” Surplus treated as a reduction of expenses in all participating funds “Excess of Billings Over Costs”

20. Internal Financial Reporting Occurs as often as management deems necessary May be on budgetary basis (or not) Does not need to follow GAAP Allows management to monitor compliance with legal & contractual provisions Provides management information on current financial performance

21. Odds & Ends“Current” Fund Balance Reserved Fund Balance* Not available for spending Inventories, long term loan receivable, encumbrances Legal restrictions narrower than purpose of fund Unreserved Fund Balance* Available for appropriation Unreserved Designated Fund Balance Management’s intended use - limitations self-imposed e.g. capital projects expenditure carryover from prior year ; “hurricane reserve” etc. Unreserved Undesignated Fund Balance Available *GASB # 54 - Fund Balance Reporting and Governmental Fund Type Definitions Periods beginning after June 15, 2010 ( i.e. FY 2011)

22. Odds & EndsGASB # 54 New fund balance Nonspendable Fund Balance Not in spendable form Inventories long term receivables Prepaid items Restricted Fund Balance Amounts constrained as being used for specific purpose by: External parties Constitutional provisions Enabling legislation

23. Odds & EndsGASB # 54 New fund balance Committed Fund Balance Constraint on use self-imposed; using highest level of decision making authority Stabilization funds Capital project carryovers Assigned Fund Balance Amounts intended to be used for specific purpose Intent expressed by governing body or authorized official Stabilization funds Capital project carryovers

24. Odds & EndsGASB # 54 New fund balance Unassigned Fund Balance Available Everything not covered in previous two slides

25. Other points Special Revenue Fund Required to account for specific revenue sources committed to specific purposes Capital Projects Fund For “projects” not equipment units Encumbrances Reported in notes Fund Balance policies Note disclosure (next slide) Esp. Committed & Assigned Fund Balance Odds & EndsGASB # 54 New fund balance

26. Other points New Note Disclosures: Fund Balances & Procedures Committed Fund Balance Assigned Fund Balance Fund Balance Classifications Encumbrances Stabilization Arrangements (if any) Minimum Fund Balance Policy Purpose of each Major Special Revenue Fund Statistical Section: Revise (Prospective) to reflect new categories Change: Letter of Transmittal, MD&A and Notes from old terminology to new Odds & EndsGASB # 54 New fund balance 26

27. Odds & Ends

28. Odds & Ends Security lending agreements Have broker fees associated Could be backed by letter of credit Governments receive collateral Asset & liability

29. Odds & Ends GASB #56 – Codification of Accounting & Financial Reporting Guidance contained in the AICPA Statements on Auditing Standards Effective on issuance (March 2009) Covers: Related party transactions Subsequent events Going concern

30. Odds & Ends Non-Exchange transactions Derived Tax Revenues Sales tax, income tax, fuel tax Imposed non-exchange revenues Property taxes (Ad valorem & personal), fines & forfeits Government mandated non-exchange transactions Formula grants Voluntary non-exchange transactions Reimbursement grants & donations

31. Odds & Ends Note Disclosure No need to disclose that a situation is not applicable (i.e. negative disclosure) ---with two exceptions: Situations where GAAP specifically require disclosure of whether a given set of circumstances applies Situation in which absence of a given set of circumstances is so unusual that omission would be viewed as a material oversight