county financial statements – the county official’s role dave geertsen, kenosha county david...
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County Financial Statements – The County Official’s Role
Dave Geertsen, Kenosha CountyDavid Maccoux, Schenck SCDawn Gunderson Schiel, Ehlers
Wisconsin Counties AssociationSeptember 22, 2015
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County Finance Director’ Perspective
• What role do County officials play with the financial statements?
• What is an audit, and was is not an audit?
• What is audit failure?
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Importance of Financial Statements
• Financial accounting and financial reporting
• Demonstrate stewardship to taxpayers and creditors
• Accountability of County officials– Remain financially solvent– Lack of business-like exchange of resources, with taxes levied on
taxpayers without necessarily receiving services– Compliance with laws and regulations
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Independent Auditors’ Report
• Responsib
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Government-wide Financial Statements
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Statement of Net Position
• Illustrates what County owns and how much does it owe.
• Assess County’s present financial status and future outlook.
• Based on historical cost principles.
• Net position components
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Statement of Net Position – Capital Assets
• Additions typically represent the purchase or addition to assets owned by the County.
• Deletions represent the sale or disposal of assets or, in the case of construction in progress, the classification to asset categories.
• Importance – Are you reinvesting in your assets?
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Statement of Net Position – Long-term Obligations
• What does changes in your long-term obligations represent?– Bonds and notes payable– Employee obligations
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Statement of Activities
• Identify cost to provide services to citizens.
• Difference between general and program revenues.
• What are the causes in your changes in financial position.
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Fund Financial Statements
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Balance Sheet – Governmental Funds
• More detailed look at your finances, concentrating on short-term view of basic services provided.
• Major fund activities reported
• Fund balance components and what is important.
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Statement of Revenues, Expenditures and Changes in Fund Balances
• Focus of statement is cash and other financial resources received within or shortly after the year while expenditures represent services and goods received and due to employees and creditors.
• Focus on net change in fund balance, and primary reasons.
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Statement of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual
• How did your County’s budget change during the year?
• How does your actual results compare to the approved budget?
• Understanding your levels of budgetary control.
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Proprietary Funds
• Measurement basis consistent with government-wide financial statements.
• Enterprise and internal service funds.
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Proprietary Funds
• Analysis of operating revenues and expenses.
• Non-operating activities
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Proprietary Funds
• Key financial statement to identify sources and uses of cash compared to operations.
• Identify future cash needs and ability of operations to meet obligations.
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Notes to Financial Statements
• Notes in complimenting financial statements of County.
• Provide additional detail, including key accounting policies
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Required Supplemental Information
• Management’s Discussion and Analysis (MD&A)– Introduction and overview of your financial statements– Increased comprehension by readers of your financial
statements– Management’s ability to highlight important issues
• Budgetary comparisons• Other Post-employment Benefits (OPEB)• Pension Information (WRS disclosures - FY 2015)
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Other Information
• Supplemental Information– Combining statements of non-major funds– Individual fund financial statements
• Statistical Section (CAFR)– Historical trend data– Demographics and other data
Measurement of Financial Viability Beyond the Basic Financial Statements
September 22, 2015
Measuring Financial Validity
• Finances– Liquidity– Budgetary Performance – Budgetary Flexibility
• Economy• Management• Debt/Pension• Institutional Framework
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Finances
• Historical Trends in General Fund Revenues and Expenditures
• Trends in Fund Balance (General Fund and Total Governmental)
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Historical Trends in General Fund Revenues and Expenditures
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Trends in Fund Balance (General Fund and Total Governmental)
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Historical Trends in General Fund Revenues and Expenditures
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Trend in Fund Balance
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Fund Balance as a % of Revenues
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Finances
• Changes in Cash Balance over 5 years
• Liquidity (What makes up fund Balance)
• Budgetary Performance (General Fund and Total Governmental Funds)
• Budgetary Flexibility
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Economy
• Equalized Value – Total Value of taxable property in the governmental unit’s boundaries. Size of tax base is a reflection on its ability to pay. Composition of tax base (Diverse)
• Trends in Equalized value and Assessed Values• Average Annual Growth in tax base – Economic health• Per Capita Equalized Value• Top 10 Tax Payers
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Diversification of Tax Base
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Equalized Tax Base Trends
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Economy
• Largest employers• Building permits• Housing units• Trends in Employment and Unemployment Data • Census Population data• Average income and age statistics• Adjusted Gross Income per tax return• Adjusted Gross Income as Percentage of State Average
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Management (Recommended Practices)
• Establish Policies– Fund Balance Policy– Debt Policy– Budget Policy– Investment Policy
• Monitor Policies and Live within them• Long Range Planning• Periodic Reporting to Elected Officials
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Policy Monitoring
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Policy Monitoring
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Debt/Pension
• Direct Debt Burden
• Overall Debt Burden
• Payout over Ten Years
• Percentage of Expenditures for Debt Service
• Pension Liability
Institutional Framework
• Legal and Practical Environment in which you operate
• Predictability of Revenues & Expenses
• Statutory Limits
• Expenditure Restraints
• Levy Limits
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Issuance of Debt and Credit Rating
• Analysis of Credit Quality
• Assist the investor in determining the risk of an investment
• Rating affects the price and interest rate that will be paid when debt is issued
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Official Statement for Security Offering
• Purpose of the Official Statement (3 Basic functions)– 1. Provide a description of the securities offered and the
transaction– 2. Assists with marketing the security– 3. Discloses risks and other material information associated with
investment in the securities
• Its purpose is to tell potential investors what they need to know in order to decide whether or not to buy the securities
