10/24/2018 - carl vinson institute of government · 2019-01-07 · 10/24/2018 1 1 finance 101 2...
TRANSCRIPT
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Finance 101
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Learning Outcomes• Define funds and review the fund structure of a government
• Identify the components of fund financial statements
• Know how fund balance is generated and what it should be used for
• Identify the laws affecting budget preparation and adoption
• Recognize the process of preparing, adopting and administering a budget
• Recall methods of budget communication
• Recite annual audit and financial reporting requirements
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Accounting
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GASB AND GAAP• The Governmental Accounting Standards Board
(GASB) is the standard-setting body for state and local governments
• Generally Accepted Accounting Principles are conventions, rules, and procedures that serve as the norm for the fair presentation of financial statements
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What is a Fund?• Separate accounting entity• Separate set of self-balancing accounts• Separate set of financial statements• Three categories of funds
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Minimum Number of FundsEstablish the minimum number of funds in order to
• Comply with laws• Exercise sound financial administration
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Fund Categories
FundsFiduciary
FundsProprietary
FundsGovernmental
EntityReporting
Most government functions financed
Business Type Activities
Do not belong to government – just holding for another external party and cannot be used for governments own programs
Fund Accounting
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Governmental FundsGeneric Fund Types
FundsPermanent
Funds
DebtService
Funds
CapitalProject
Funds
SpecialRevenueFund
General
FundsGovernmental
E-911, Law Library, Hotel/Motel
Confiscated Assets
GO Bonds, SPLOST
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Proprietary FundsGeneric Fund Types
Internal ServiceFundsFunds
Enterprise
Proprietary
Water/Sewer, Electric, Gas, Cable, Solid Waste, Mass
Transit, Civic Center
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Fiduciary FundsGeneric Fund Types
Funds
Private PurposeTrust
PensionTrustFundsFunds
InvestmentTrust
FundsAgency
FundsFiduciary
Court Fees
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Uniform Chart of Accounts
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TYPES of financial statements• Statements of Position• Operating Statements
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Statements of Position• Balance Sheet• Statement of Net Position
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Current Assets
Deferred Outflows
Governmental Funds Balance Sheet
Page A-1
Current Liabilities
Deferred Inflows
Balance Sheet
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Equity
Governmental Funds Balance Sheet A-1
Balance Sheet
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Balance Sheet – Governmental Funds• Focus on ability to pay the government’s bills• Near-term cash inflows and outflows• Does NOT include capital assets• Does NOT include long term debt
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Statement of Net Position – Proprietary Funds
• Focus on economic perspective of government• BOTH current and non-current assets and current
and non-current liabilities • Includes Capital Assets• Includes Long Term Debt
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Proprietary Funds
Page A-3
Current Assets
Noncurrent Assets
Statement of Net Position – Proprietary Funds
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Current Liabilities
Noncurrent Liabilities
Statement of Net Position – Proprietary Funds
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Operating Statement
• Revenues• Expenditures/Expenses
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Governmental Fund Operating Statement
Page A-2
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Governmental Fund Operating Statement
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Governmental Fund –Operating Statement
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Proprietary FundsPage A-4
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Relationship Operating Statement to Balance Sheet
Ending fund balance – operating statement = ending fund balance on balance sheet
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Name of Government
Date
Revenues Budgeted Actual Encumbrances Variance
Property Tax
Sales Tax
Charges for Services
Other Revenues
Total
Expenditures
General Government
Police
Parks/Rec
Total Expenditures
Excess Revenues
Over/(Under) Expenditures
Beginning Fund Balance
Ending Fund Balance
Internal Report
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Review
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ReviewFor reporting purposes, governments classify their individual funds within three categories -A. Governmental, Proprietary, and Fiduciary B. General, Special, and Debt Service C. Governmental, Enterprise, and FiduciaryD. None of the above
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ReviewFor reporting purposes, governments classify their individual funds within three categories -A. Governmental, Proprietary, and Fiduciary B. General, Special, and Debt Service C. Governmental, Enterprise, and FiduciaryD. None of the above
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ReviewThe five generic governmental funds are G___________S_______ R_________C_________ P________D________ S_________P__________
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ReviewThe five generic governmental funds are GeneralSpecial RevenueCapital Projects Debt ServicePermanent
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ReviewThe two generic proprietary funds are E_________I_________ S________
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ReviewThe two generic proprietary funds are EnterpriseInternal Service
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ReviewThe four generic fiduciary funds are P_______ P_______ T_______P_______ T__________I___________ T______A_________
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ReviewThe four generic fiduciary funds are Private Purpose TrustPension TrustInvestment TrustAgency
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Fund Balance
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What is Fund Balance?• Equity in Governmental funds• Revenue increases fund balance and expenditures
decrease fund balance
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Is Fund Balance Equal to Cash and Investments?
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Is Fund Balance Equal to Cash and Investments?
• Cash and investments are a part of fund balance• Other parts of fund balance include amounts
owed to your government, cash value of inventory and other assets
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Governmental Fund EquityNet Current Assets or Fund BalanceCalculated as follows:
Current Assets & Deferred Outflows
Current Liabilities
& Deferred Inflows
Fund Balance
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How the Fund Balance Evolved - Year 1Net result of the difference between revenues and expenditures from the inception of the government
Revenues $ 100,000Expenditures $ ‒ 90,000Net Revenue $ 10,000
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How the Fund Balance Evolved – Year 2
Revenues $ 110,000Expenditures $ 95,000Net Revenue $ 15,000
Fund Balance Year 1 $ 10,000
Fund Balance Year 2 $ 25,000
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How the Fund Balance Evolved – Year 3
Revenues $ 97,000Expenditures $ 100,000Net Revenue $ -3,000
Fund Balance Year 2 $ 25,000
Fund Balance Year 3 $ 22,000
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Use of Fund BalanceThe fund balance should be used for• One-time expenditures• Unexpected events
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Available Fund BalanceThe entire Fund Balance may not be available to fund deficiency of revenues and expenditures
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Fund Balance—5 Categories
Nonspendable• Inventory• Advances to• Permanent fund
principal
Unassigned• What’s left
Restricted• Debt Covenant• Enabling
Legislation
Committed• Formal Board
Action to commit or de-commit
Assigned• Intent • Not
restricted or committed
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Fund BalanceFund Balance
Nonspendable $100,000
Restricted $250,000
Committed $175,000
Assigned $ 25,000
Unassigned $133,000
Total Fund Balance $683,000
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Unrestricted Fund BalanceUnrestricted
Committed Assigned Unassigned
Maintain balance sufficient to manage risk of revenue fluctuations and unexpected expenditures
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What is the Right Amount of Unassigned Fund Balance?
• Unique to each government• Government Finance Officers Recommends
2 months of General Fund operating revenues or expenditures
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Where Do You Stand?Unassigned Fund Balance as a % of General Fund operating revenues:
Calculated as follows: Unassigned Fund Balance /General Fund Revenues = %
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Sample Calculation – Step 1Identify Unassigned Fund Balance – Governmental Funds Balance Sheet
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Sample Calculation – Step 2Identify Total Revenues for the General Fund -
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Sample Calculation – Step 3
General Fund Unassigned Fund Balance 4,815,949$
Total General Fund Revenues 34,620,817$
Unassigned Fund Balance as a % of Revenues 13.91%
Perform the following calculation-
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Fund Balance vs. Contingency• Fund Balance and Contingency are not the same• The law is silent on how much contingency to budget• Amounts are not charged to the contingency line
item—budgetary only• Budget adjustments are necessary to move
contingency to appropriate account for spending
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Review
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Review
Fund Balance is defined as the difference between current assets & deferred outflows of resources and current liabilities & deferred inflows of resources.
True or False
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Review
Fund Balance is defined as the difference between current assets & deferred outflows of resources and current liabilities & deferred inflows of resources.
True or False
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Review
Georgia Law requires governments to budget a contingency in an amount no less than 3% and no greater than 5%.
True or False
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Review
Georgia Law requires governments to budget a contingency in an amount no less than 3% and no greater than 5%.
True or False
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Review
Ending fund balance on the operating statement must equal ending fund balance on the balance sheet.
True or False
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Review
Ending fund balance on the operating statement must equal ending fund balance on the balance sheet.
True or False
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ReviewGeneral Fund Balance categories include the following-A. NonspendableB. RestrictedC. Committed D. Assigned E. UnassignedF. All of the above
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ReviewGeneral Fund Balance categories include the following-A. NonspendableB. RestrictedC. Committed D. Assigned E. UnassignedF. All of the above
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ReviewWhat is the minimum fund balance reserve recommended by the Government Finance Officers Association?A. 12 monthsB. 6 monthsC. 3 monthsD. 2 months
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Review
What is the minimum fund balance reserve recommended by the Government Finance Officers Association?A. 12 monthsB. 6 monthsC. 3 monthsD. 2 months
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Budget and Other Laws
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O. C. G. A.
Official Code of Georgia Annotated
http://www.lexisnexis.com/hottopics/gacode/Default.asp
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Budget Law On-Line
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https://cviog.uga.edu/publications/compliance-auditing-publication.html
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What Governs the Budget?
Georgia Budget Law and PolicyOfficial Code of Georgia Annotated (O.C.G.A) Sections 36-81-2 to 36-81-6Local ChartersFinancial Policies
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O.C.G.A. §36-81-3Balanced Budget
Estimated Revenue Sources + Fund Balances = Appropriations
General FundSpecial Revenue FundDebt Service Fund
Capital ProjectsProject-length balanced budget
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O.C.G.A. §36-81-3
Option to adopt budgets for any remaining fundsAdopt by ordinance or resolution
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Balanced or Unbalanced?
Example 1 Revenues 100,000$
Expenditures 100,000$
Difference -$
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Balanced or Unbalanced?
Example 2 Revenues 100,000$
Expenditures 110,000$
Difference (10,000)$
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Balanced or Unbalanced?
Example 3 Revenues 110,000$ Expenditures 100,000$
Difference 10,000$
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Balanced or Unbalanced?
Example 4 Revenues 80,000$ Fund Balance 20,000$ Expenditures 100,000$
Difference -$
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Sample Budget Resolution
See
Sample
Resolution
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Budget AmendmentsChanges to original budget—require ordinance or resolutionIncrease in appropriation—legal level of control
Change in revenuesTransfer of appropriations between departments
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Budget CommunicationO.C.G.A. §36-81-5
Citizens must have access to the budget document same day as it is made available to governing authorityAdvertise budget availability in newspaper during week budget is made available to governing authority as well as date of hearing for public comment. http://georgiapublicnotice.com/
Must be easily identified—CANNOT be placed with legal ads
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Budget CommunicationO.C.G.A. §36-81-5
At least one week before budget resolution or ordinance is voted on, a public hearing must be held. Advertisement of the hearing date and time must occur one week prior to the hearing.See “Sample Public Hearing Advertisement (Page A-9).”
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Electronic Reports SubmissionO. C. G. A. §36-80-21Requirement to post documents to Carl Vinson Institute of Government website for governments with budget exceeding $1 million
PDF of approved budget must be posted within 30 calendar days of adoption by ordinance or resolutionPDF of completed audit must be posted as soon as practicable (also must submit to Department of Audits)
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Electronic Reports SubmissionO. C. G. A. §36-80-21Report of Forfeited Assets required by O.C.G.A. §9-16-19 must be submitted to the Vinson Institute as soon as practicable
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https://ted.cviog.uga.edu/financial-documents/
https://ted.cviog.uga.edu/financial-documents/
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O.C.G.A. §13-10-91
Requirement to post on the government’s website federally issued user ID # and date of authorization used to determine employment eligibility of workersIf government does not have a website, must post to Carl Vinson Institute of Government website
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E-Verify Posting
https://ted.cviog.uga.edu/financial-documents/node/add/e-verify-form
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Property TaxesO.C.G.A. §48-5-32
Must publish in newspaper one week before establishment of millage rates
assessed taxable value of all property, by class and in totalproposed millage ratetotal ad valorem taxes to be levied
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Property TaxesO.C.G.A. §48-5-32
Must be published for the current year and the preceding five years
See Sample on Page A-6Must include date and time of meeting in which millage will be adopted
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Advertisement
http://dor.georgia.gov/county-tax-digest-submission-package-2017
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Review
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ReviewBy law, governments are required to adopt and operate under an annual balanced budget for the -
A. General fund, each special revenue fund and each debt service fund
B. All fundsC. Only the general fundD. None of the above
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ReviewBy law, governments are required to adopt and operate under an annual balanced budget for the -
A. General fund, each special revenue fund and each debt service fund
B. All fundsC. Only the general fundD. None of the above
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ReviewGeorgia law states that governments are required to adopt and operate under a project-length balanced budget for -
A. All fundsB. The general fundC. Each capital project fundD. The general fund, special revenue fund and each
debt service fund
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ReviewGeorgia law states that governments are required to adopt and operate under a project-length balanced budget for -
A. All fundsB. The general fundC. Each capital project fundD. The general fund, special revenue fund and each
debt service fund
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ReviewA budget ordinance or resolution is balanced when –
A. Assets minus liabilities equal fund balanceB. Credits equal debitsC. The sum of estimated revenues and appropriated
fund balances is equal to appropriationsD. Expenses/expenditures equal appropriations
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ReviewA budget ordinance or resolution is balanced when –
A. Assets minus liabilities equal fund balanceB. Credits equal debitsC. The sum of estimated revenues and appropriated
fund balances is equal to appropriationsD. Expenses/expenditures equal appropriations
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Budget Process Overview
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Purpose of a Budget
Tool for financial managementPlan for providing services Tool for communicating to the public
Fiscal and management policiesHow services are to be fundedPriorities for services delivered
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Budget Process—OverviewThe budget process influences
Political goals and objectivesMaintain services without increasing taxes
Departmental revenue and staffing limitationsMandated programs and servicesChanges to service levels
Increase parks/recreation servicesIncrease fire and police
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Budget Process—OverviewProcess centers around start of fiscal year Budget calendar sets a timeline to ensure budget is adopted before beginning of fiscal year
Deadlines for departments to submit informationDates for advertising and hearingsGoverning Authority Review and Adoption
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Budget Calendar
https://www.gwinnettcounty.com/static/departments/financialservices/2017_budget/2017_BudgetDocument_Final.pdf
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Budget Process—OverviewThe Budget Officer
• Develops and distributes budget forms and instructions to departments
• Compiles all information submitted into a single document
• Estimates revenues; combines with departmental expenditures
• Meets with government’s chief executive regarding changes
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Budget Process—OverviewThe governing body
• Sets priorities for the upcoming year • Reviews proposed budget • Asks questions about increases and decreases and recommended allocation of resources
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Budget Process—RevenuesCommon Revenue Sources
Property taxesTitle ad valorem taxesInsurance premium taxesSales taxesFranchise fees Beer and wine license and excise taxes
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Budget Process—Revenues
Common Revenue SourcesBusiness licensesBuilding permitsFines and forfeituresIntergovernmental revenues
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Revenue ProjectionRequires knowledge of
Present and past conditionsGovernment’s financial condition
Good judgment
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Revenue ProjectionProperty taxes—estimated by using tax digest informationSales tax—current economic conditionBe conservative
Better to be too low than too high
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Budget Process—RevenueBasic ConsiderationsAcceptability—Will the tax fairly impact those affected?
Example—sales tax Stability—Will tax collections remain stable in times of economic fluctuations?
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Budget Process—RevenueBasic Considerations
Self-sufficiency—avoid becoming dependent on state or federal grantsCost efficiency—providing the best quality of services in the most efficient manner
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Recommended PracticeRevenue Policy
Understanding the revenue stream is essential to prudent planning. Most of these policies seek stability to avoid potential service disruptions caused by revenue shortfalls. At a minimum, jurisdictions should have policies that address:
1. Revenue Diversification—A government should adopt a policy/policies that encourages a diversity of revenue sources in order to improve the ability to handle fluctuations in individual sources. (NACSLB Practice 4.6)
National Advisory Council on State and Local Budgeting (NACSLB)
Recommended Budget Practices—Revenue
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Recommended PracticeRevenue Policy
2. Fees and Charges—A government should adopt policy(s) that identify the manner in which fees and charges are set and the extent to which they cover the cost of the service provided. (NACSLB Practice 4.2)
3. Use of One-Time Revenues—A government should adopt a policy(s) limiting the use of one-time revenues for ongoing expenditures. (NACSLB Practice 4.4)
4. Use of Unpredictable Revenues—A government should adopt a policy(s) on the use of major revenue sources it considers unpredictable. (NACSLB Practice 4.4a)
National Advisory Council on State and Local Budgeting (NACSLB)
Recommended Budget Practices—Revenue
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http://www.gfoa.org/framework-improved-state-and-local-government-budgeting
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Review
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Review Revenues should be estimated on an objective and conservative basis.
True or False
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Review Revenues should be estimated on an objective and conservative basis.
True or False
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Review The four basic considerations when budgeting revenueA__________S_________S________ S__________C_______ E___________
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Review The four basic considerations when budgeting revenueAcceptabilityStabilitySelf Sufficiency Cost Efficiency
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Review The Budget is A. Tool for financial managementB. Plan for providing services C. Tool for communicating to the publicD. All of the above
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Review The Budget is A. Tool for financial managementB. Plan for providing services C. Tool for communicating to the publicD. All of the above
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Property Tax Revenue
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Property TaxesOldest form of taxes levied in U.S.Primary revenue source for countiesOnce considered a stable revenue source
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Property TaxesReal and personal property
Real – real estate, land and buildingsPersonal – inventory, equipment of businesses, boats and motors, airplanes and financial system assets.
Public utilitiesFor the majority of governments, Georgia law requires that property be valued at the fair market value then taxed at an assessed value of 40%
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Millage RateMillage rate—applied to the appraised value of a parcel of property and determines the tax due
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Millage RateMill = $1 per $1,000 of assessed property value
Expressed in terms of the following; • 1/1000 of a dollar or• 0.001 x assessed value
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Millage Rate
Appraisal value $100,000
Assessed at 40% (state law) $40,000
Less exemptions -$10,000
Taxable value $30,000
$30,000 x 12.5 mills (county) $375
18.2 (schools) $546
2.83 (cities) $85
Total $1,006
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Determining the Correct MillageProperty tax revenues cover the gap between the planned expenditures and forecasted revenues.
Tax Rate = Amount RequiredAssessed Value
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Determining the Correct MillageEstimated expenditures = $1,560,000Estimated revenues = $1,420,000Total assessed value = $10,000,000
Calculate the millage necessary to balance the budget
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Determining the Correct Millage
Estimated expenditures = $1,560,000Estimated revenues = $1,420,000
Amount needed to balance the budget
$140,000
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Determining the Correct Millage
Tax Rate = Amount Required / Assessed Value
$140,00010,000,000
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Determining the Correct Millage
Tax Rate = Amount Required / Assessed Value
$140,00010,000,000
Millage required to cover the gap: 0.014
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Taxpayer Bill of RightsO.C.G.A. §48-5-32.1• In any year of revaluation, levying authorities
must rollback millage rates to offset total increase of tax digest due to revaluation or advertise “Notice of Property Tax Increase” and hold three public hearings
• Tax Commissioner/Chief Appraiser computes rollback rate and certifies same to each levying authority
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Taxpayer Bill of Rights• “Rollback rate” means the previous year's
millage rate minus the millage equivalent of the total net assessed value added by reassessments
• Rollback rate is computed by either Tax Commissioner or Tax Assessor on prescribed form from the DOR. Form must be submitted with digest
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SEE
Page
A-5
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Taxpayer Bill of Rights
• Essentially, any inflationary increase in the digest must be offset by a rollback of the millage rate, or public hearings must be held and additional newspaper ad must be run
• In instances in which there is no revaluation, if millage rates are increased, the public hearing requirement may apply
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Advertisement
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Review
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ReviewFor the majority of governments, Georgia law requires that property be valued at the fair market value then taxed at an assessed value of -A. 30%B. 35%C. 40%D. 45%
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ReviewFor the majority of governments, Georgia law requires that property be valued at the fair market value then taxed at an assessed value of -A. 30%B. 35%C. 40%D. 45%
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ReviewOne mill of tax is equivalent to $1 per thousand of taxable assessed value.
True or False
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ReviewOne mill of tax is equivalent to $1 per thousand of taxable assessed value.
True or False
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ReviewFor a government that has a net taxable digest of $2,093,130,182, the value of one mill of tax would be equivalent to -A. $209,313,000B. $2,093,130C. $209,313D. None of the above are correct
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ReviewFor a government that has a net taxable digest of $2,093,130,182, the value of one mill of tax would be equivalent to -A. $209,313,000B. $2,093,130C. $209,313D. None of the above are correct
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ReviewIf a governing authority levies a millage rate that is greater than the roll back rate they must hold _____ hearings to comply with the Tax Payer Bill of Rights.A. OneB. TwoC. ThreeD. Four
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ReviewIf a governing authority levies a millage rate that is greater than the roll back rate they must hold _____ hearings to comply with the Tax Payer Bill of Rights.A. OneB. TwoC. ThreeD. Four
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Review______ weeks prior to setting the millage rate, Georgia governments are required to advertise, in the legal organ of their jurisdiction, the current year tax levy and five year history of the tax levy.A. OneB. TwoC. ThreeD. Four
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Review______ weeks prior to setting the millage rate, Georgia governments are required to advertise, in the legal organ of their jurisdiction, the current year tax levy and five year history of the tax levy.A. OneB. TwoC. ThreeD. Four
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EXPENDITURES
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Line ItemTraditional budgetingMost frequently used by local governmentsMost simplePrimary emphasis – CONTROL
Focus is on inputs (what is to be spent)
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Line Item Example
Superior Court Clerk
AccountCurrentBudget
ProposedBudget
% IncreaseDecrease
Salaries $55,000 $57,200 4%
Overtime $5,000 $5,500 10%
Part-time $10,000 $12,000 20%
Supplies $4,000 $4,500 12.5%
Travel $1,000 $1,500 50%
Total $75,000 80,700 7.6%
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Line ItemDisadvantages
Encourages incrementalismBase initial budget requests on the amount of budgeted resources in last year’s budget
Does not require departments to consider alternative methods to spending or delivering services.Does not consider if the service should even be offered.
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Activity BudgetNext step up from line-item budgeting
Various activities within the same department are recognized
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Activity BudgetFinance Department
Account Accounting Treasury Budget
Salaries $55,000 $57,200 $62,000
Overtime $5,000 $5,500 $1,000
Part-time $10,000 $12,000 $2,000
Supplies $4,000 $4,500 $3,000
Travel $1,000 $1,500 $2,000
Total $75,000 80,700 $70,000
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Activity BudgetActivities within other departments:
PoliceFirePublic Works
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Program Budget• Organizes proposed expenditures according
to broader overall functions• Focus is no longer on what is purchased• Focus is on what services are being provided• Goals are defined and expenses are allocated
based on the defined goal
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Program BudgetExample: Enhance accessibility of official records for public use by expanding services available via the Internet
Provide on-line access of recorded court and real estate documents by September 2010
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Program BudgetSample Program Budget
Superior Court Clerk Program: Record accessibility
Expenditure Classification
Previous Fiscal Year Actual
Current Fiscal Year Budget
Next Fiscal Year Request
Salaries $ $ $
Supplies $ $ $
Contractual Services $ $ $
Capital Outlay $ $ $
Total $ $ $
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Program BudgetDrawbacks
Reorganization of the budgetMany activities contribute to more than one objective Not all resources can be assigned to a single program.
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Performance Budget
Advantagesemphasizes department performance objectives rather than purchases of resources emphasizes efficiency and effectiveness of services
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Performance BudgetDisadvantages
more complicated than line-item or program budgets does not require departments to consider alternatives does not consider whether the service is worth the cost of providing it
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Zero-Based BudgetDepartments show various levels of service that can be provided at different levels of funding
Advantages makes governments more flexible, eliminates unproductive programs, improves effectiveness by forcing department heads to consider total programs each year
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Zero-Based BudgetDisadvantages
generates a lot of paperwork, not realistic to consider zeroing some programs, does not take into account state and federally mandated services, does not compare service costs with what a service is actually worth
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Review
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ReviewThe budget that offers the most control is –
A. Line-itemB. Zero-baseC. PerformanceD. Activity
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ReviewThe budget that offers the most control is –
A. Line-itemB. Zero-baseC. PerformanceD. Activity
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ReviewWhat kind of budget is this?
Finance DepartmentAccount Accounting Treasury Budget
Salaries $55,000 $57,200 $62,000
Overtime $5,000 $5,500 $1,000
Part-time $10,000 $12,000 $2,000
Supplies $4,000 $4,500 $3,000
Travel $1,000 $1,500 $2,000
Total $75,000 80,700 $70,000
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ReviewWhat kind of budget is this? Activity
Finance DepartmentAccount Accounting Treasury Budget
Salaries $55,000 $57,200 $62,000
Overtime $5,000 $5,500 $1,000
Part-time $10,000 $12,000 $2,000
Supplies $4,000 $4,500 $3,000
Travel $1,000 $1,500 $2,000
Total $75,000 80,700 $70,000
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ReviewWhat kind of budget organizes proposed expenditures according to broader overall functions?A. ProgramB. ActivityC. Line itemD. Basic
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ReviewWhat kind of budget organizes proposed expenditures according to broader overall functions?A. ProgramB. ActivityC. Line itemD. Basic
168168
Administering the Budget
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Budget AdministrationResponsibility—Chief Executive (Manager, Mayor)Five Major Components Authorization
Appropriation
Allocation
Allotments
Adjustments
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Budget Administration Components
• Law that permits spending money (ordinance or resolution)
Authorization
• Legal authority to spend up to a certain amount
Appropriation
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Budget Administration Components
• Provide further detail to the amounts approved by governing body
Allocations
• Divide appropriation into periods of time
Allotments
• Necessary when spending varies from initial budget
Adjustments
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Expenditure ControlsPurchase orders—method of authorizing expenditures and controlling spending
May encumber contracts and budgeted expenditures Unallocated reserves—may hold a portion of the budget in a contingency line for unexpected expenditures or in case of revenue shortfallLine-item appropriations—travel, supplies, etc.
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Expenditure ControlsPosition control—ensures positions are limited to those funded in the budget processCeilings or freezes—used in financial crisis to freeze spending on some or all items or cap expenditures for some or all purposes
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Communicating the Budget
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Maximize Use of the Web
Gwinnett County
Property Tax Calculator
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Maximize Use of the Web
Gwinnett County FY2018
Budget in Brief
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Gwinnett County FY2018
Budget in Brief
Maximize Use of the Web
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Budget IncreasesUse an example that the public can relate to:
The millage rate increase of $.46 per $1,000 would result in a property tax increase for a homeowner with a $140,000 house and $10,000 homestead exemption of $23.92, about the cost of a hardback book.
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Financial Reporting and Audits
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Accounting
O.C.G.A. §36-81-3Requires use of a uniform chart of accounts
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Preparation of External Financial Statements
Required to be prepared in accordance with statements of the Governmental Accounting Standards Board as follows:
Management’s Discussion and AnalysisGovernment-wide financial statementsFund-level financial statementsNote disclosuresBudgetary comparison schedules on the General Fund and each fund that has a legally adopted budget
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Audit Opinion
An opinion on the fair presentation in all material respects of financial statements
Unmodified opinionModified opinion
Qualified opinionAdverse opinion Disclaimer of opinion
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Report RequirementsAuditor compliance with GAGAS (Generally Accepted Government Auditing Standards)Reporting on internal control and compliance with provisions of laws, regulations, contracts, and grant agreementsDeficiencies in internal control, fraud, noncompliance with provisions of laws, regulations, contracts, grant agreements, and abuse
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Report RequirementsViews of responsible officialsConfidential or sensitive informationDistribution requirements
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Georgia Law RequirementsO.C.G.A. §36-81-7
Each unit of local government with a population over 1,500 or expenditures of $300,000 must have an annual audit.Units of local government with a population of 1,500 or less or expenditures less than $300,000 are required to complete an audit every two years for both fiscal years.
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Georgia Law RequirementsAudit is due 180 days after the year-end of your local government to the State of Georgia Local Government Division Department of Audits and Accounts.Corrective action plan is due 30 days after your audit is due to the state Department of Audits.
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Auditor SelectionIndependentQualified to perform government audits
CPE—required to complete every two years 24 hours of CPE pertaining to government audits or government environment as part of an 80-hour total requirement
RFP sample—Georgia Department of Audits
http://www.audits.ga.gov/NALGAD/Files/RFP_Revision_2015.doc
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Other Types of AuditsPerformance Audits
Measure efficiency of performance of various activitiesProgram Audits
Evaluate the overall effectiveness of programs
Both Performance and Program Audits help governments make better decisions about whether services and programs are worth the investment of revenues.
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DCA—ReportingGeorgia law requires completion of Report of Local Government Finances.
Report form references uniform chart of account numbers to facilitate consistency in information reported.
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