[entity name] - ohio auditor of state · web viewfor financial statements for periods beginning...

This small government AOS basis shell should be used for PRE-GASB54 financial statement presentations.

GASB 54 shells are available on the AOS Audit Employees Briefcase and / or AOS Internet / IPA Resources.

Auditor of State Bulletin 2011-004 mandated Governmental Accounting Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions for financial statements for periods beginning after June 15, 2010.

AOS will not require regulatory basis presentations to revise statements presented for earlier periods.

o For example, a two-year audited presentation covering FYE 2011 and 2010 must apply Statement 54 to its 2011 statements, but may present the 2010 statements without applying 54. So, separate presentations for 2010 and 2011 are not required, and one set of notes /

opinion / GAGAS report suffices. AOS-basis entities must apply both the fund balance reporting and fund type definitions

when they adopt Statement 54. Audit opinions would refer to the change effective in FYE 2011, but would not qualify

(include “except for” language) for 2010 “pre 54” statements. Applying Statement 54 to 2010 statements is certainly acceptable, and even

preferable. Opinions thereon would mention the change occurring during 2010.

[LIBRARY NAME][COUNTY NAME] COUNTY

Revised January 20121

DELETE ALL HIGHLIGHTED TEXTsearch and replace:

20BB replace with beginning fiscal year20EE replace with ending fiscal year

TABLE OF CONTENTS

TITLE PAGE

Cover Letter...................................................................................................................................................

Independent Accountants’ Report..................................................................................................................

Combined Statement of Cash Receipts, Cash Disbursements, and Changes in Fund Cash Balances - All Fund Types - For the Year Ended December 31, 20EE....................................................................................................

Combined Statement of Cash Receipts, Cash Disbursements, and Changes in Fund Cash Balances - All Fund Types - For the Year Ended December 31, 20BB....................................................................................................

Notes to the Financial Statements.................................................................................................................

Independent Accountants’ Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Required by Government Auditing Standards .............................................................................................

Schedule of Findings (IF APPLICABLE)........................................................................................................

Schedule of Prior Audit Findings (IF APPLICABLE) .....................................................................................

1 Revised January 2012 to remove opinion letter and add information on page 1.

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[ENTITY NAME][COUNTY NAME] County[STREET ADDRESS][CITY], Ohio [ZIP CODE]

To the [GOVERNING BODY]:

As you are aware, the Auditor of State’s Office (AOS) must modify the Independent Accountants’ Report we provide on your financial statements due to an interpretation from the American Institute of Certified Public Accountants (AICPA). While AOS does not legally require your government to prepare financial statements pursuant to Generally Accepted Accounting Principles (GAAP), the AICPA interpretation requires auditors to formally acknowledge that you did not prepare your financial statements in accordance with GAAP. Our Report includes an adverse opinion relating to GAAP presentation and measurement requirements, but does not imply the amounts the statements present are misstated under the non-GAAP basis you follow. The AOS report also includes an opinion on the financial statements you prepared using the cash basis and financial statement format the AOS permits.

Dave Yost Auditor of State

[REPORT DATE]

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Insert AOS basis opinion letter

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WORD PROCESSOR

WILL INSERT

FINANCIAL

STATEMENT

HERE

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WORD PROCESSOR

WILL INSERT

FINANCIAL

STATEMENT

HERE

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[ENTITY NAME][COUNTY NAME] COUNTY

NOTES TO THE FINANCIAL STATEMENTSDECEMBER 31, 20HH AND 20BB

Note: UAN provides proprietary and agency fund types for Libraries. Should a Library establish a proprietary or agency fund, you should insert the appropriate fund type descriptions and make any other necessary footnote and financial statement modifications. There are examples in other report shells which you can cut and paste into this example.

1. Summary of Significant Accounting Policies

A. Description of the Entity (Modify as needed.)

The constitution and laws of the State of Ohio establish the rights and privileges of the [Entity Name], [County Name] County, (the Library) as a body corporate and politic. (Board or Entity) appoint a (number)-member Board of Trustees to govern the Library. The Library provides the community with various educational and literary resources.

The [name of foundation] is also associated with the Library. Since the Foundation’s tax exemption is based on the Foundation’s intent to support the Library, its financial statements are included in this report. MODIFY AS NEEDED. FOUNDATIONS CAN BE A DIFFICULT AND CONTENTIOUS ISSUE. YOU SHOULD ALWAYS CONSULT WITH YOUR CHIEF AUDITOR REGARDING FOUNDATIONS. CONSIDER CONSULTING WITH A&A.

Note: The above foundation note is only an example. The following summarizes the Auditor of State’s policy (from the cash-basis representation letter) regarding AOS-basis reporting of component units:

1) Use GASB 14 & 39 to determine if an entity is or is not a component unit.

2) If a component unit(s) exists, the auditee should disclose it using any of the following presentations:

a) Discrete presentation (this obviously requires obtaining financial statements from the CU):

b) Supplemental information -- We may rely on another auditor’s opinion per AU 543, but could not use an "in relation to opinion," if the CU's statements were not derived from information that we have audited. This option might be useful if the primary government reports using the cash basis and CU issues GAAP financial statements.

c) Include footnote disclosure that a CU exists, and how audited CU statements can be obtained (assuming the CU was audited). Briefly disclose why the entity is deemed a CU, such as by appointing a voting majority of the CUs board, or if the fiscal dependency criteria of GASB 14 apply. No financial information is required.

Item 2(c) above is sufficient to satisfy disclosure requirements for cash basis entities with component unit, and should not be a burdensome requirement. Following 2(a) or 2(b) in addition to 2(c) would obviously be a more complete presentation, however.

3) If entity refuses to disclose component information in accordance with (2) above, qualify the cash basis opinion for inadequate disclosure/omission of information.

It is conceivable that we could present unaudited information as a discrete presentation or

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supplemental data. If so, we'd obviously have to disclaim on it.

4) If a component unit is not audited, we can use our judgment to determine whether to use our statutory authority to require an audit. We should consider the amount of public money the component unit receives and other risks.

The Library’s management believes these financial statements present all activities for which the Library is financially accountable. (Continue the sentence with the following, if applicable.), except the financial statements do not include debt service funds external custodians maintain. Note 6 to the financial statement describes these assets.

B. Accounting Basis

These financial statements follow the accounting basis the Auditor of State prescribes or permits. This basis is similar to the cash receipts and disbursements accounting basis. The Library recognizes receipts when received in cash rather than when earned, and recognizes disbursements when paid rather than when a liability is incurred. Budgetary presentations report budgetary expenditures when a commitment is made (i.e., when an encumbrance is approved). [DELETE PRECEDING SENTENCE IF ENCUMBRANCE ACCOUNTING IS NOT USED. NEITHER THE REVISED CODE NOR THE NEW OHIO ADMINISTRATIVE CODE REQUIRE LIBRARIES TO ENCUMBER AFTER 2000.]

These statements include adequate disclosure of material matters, as the Auditor of State prescribes or permits.

C. Deposits and Investments

The Library’s accounting basis includes investments as assets. This basis does not record disbursements for investment purchases or receipts for investment sales. This basis records gains or losses at the time of sale as receipts or disbursements, respectively.

The Library U.S. Treasury Notes and common stock at cost (or fair value when donated).<<DELETE IF NO DONATED INVESTMENTS. Money market mutual funds (including STAR Ohio) are recorded at share values the mutual funds report. Modify this note as needed. Only describe investments actually held during the audit period. Equity securities (stock) are normally illegal, unless donated. Consult with the Legal Division if in doubt about an investment’s legality. Also, if equity securities have an impaired value deemed “other than temporary,” write them down to fair value. Consider consultation on the matter.)

D. Fund Accounting

The Library uses fund accounting to segregate cash and investments that are restricted as to use. The Library classifies its funds into the following types:

(Delete all unnecessary fund types)

1. General Fund

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The General Fund reports all financial resources except those required to be accounted for in another fund.

2. Special Revenue Funds

These funds account for proceeds from specific sources (other than from private-purpose trusts or for capital projects) that are restricted to expenditure for specific purposes. The Library had the following significant Special Revenue Funds: (Include a one or two sentence description of any special revenue fund constituting at least 20 percent of combined special revenue disbursements or are deemed significant.

3. Debt Service Funds

These funds account for resources the Library accumulates to pay bond and note debt. The Library had the following significant Debt Service Funds: (Include a one or two sentence description of any debt service funds constituting at least 20 percent of combined debt service fund disbursements or are deemed significant.)

4. Capital Project Funds

These funds account for receipts restricted to acquiring or constructing major capital projects (except those financed through enterprise or trust funds). The Library had the following significant capital project funds: (Include a one or two sentence description of any capital project funds constituting at least 20 percent of combined capital project disbursements or are deemed significant.)

5. Permanent Funds

These funds account for assets held under a trust agreement that are legally restricted to the extent that only earnings, not principal, are available to support the Library’s programs. The Library had the following significant permanent fund: (Include a one or two sentence description of any permanent funds constituting at least 20% of combined permanent fund disbursements or other funds deemed significant. The following is an example that must be modified.)

6. Private-Purpose Trust Funds

Private-purpose trust funds account for assets held under a trust agreement for individuals, private organizations, or other governments which are not available to support the Library’s own programs.

The Library’s private purpose trust fund(s) are for the benefit of certain individuals, a non profit organization and the Library of X. (<<<Modify as needed. Omit ¶ if there are none).

(Note: classifying private purpose funds requires judgment. If the intent generally benefits the government’s own programs, permanent or special revenue fund classification is appropriate. However, if the intent is to benefit a specific individual, private organization, or an other government which is not available to support the

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Library’s own programs, trust fund classification is more appropriate. See Bulletin 2005-05 for additional classification guidance.)

E. Budgetary Process

The Board must annually approve appropriation measures and subsequent amendments. Unencumbered appropriations lapse at year end. (Delete the word “unencumbered,” if there were no encumbrances outstanding at year end, or the Library did not use encumbrance accounting.) Budgetary expenditures (that is, disbursements and encumbrances)<< DELETE THE HIGHLIGHTED PHRASE IF THE LIBRARY DID NOT ENCUMBER may not exceed appropriations at the fund, function, and object level of control (modify to describe the legal level of control used).

A summary of 20EE and 20BB budgetary activity appears in Note 3.

F. Property, Plant, and Equipment

The Library records disbursements for acquisitions of property, plant, and equipment when paid. The accompanying financial statements do not report these items as assets.

G. Accumulated Leave

In certain circumstances, such as upon leaving employment, employees are entitled to cash payments for unused leave. The financial statements do not include a liability for unpaid leave. (Delete this note if no employees are entitled to these benefits)

2. Equity in Pooled Deposits and Investments

The Library maintains a deposit and investments pool all funds use. The Ohio Revised Code prescribes allowable deposits and investments. The carrying amount of deposits and investments at December 31 was as follows:

Note: The above is an embedded Excel Spreadsheet. Double-click to edit. Do not enter $ signs.)

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At December 31, 20EE, (Insert other time period noted, if any, or other ineligible investments, if any. Also, disclose material amounts as a material violation in the Compliance Report. Note that entities may be allowed to hold equity securities, if required under a trust agreement. Check with the Legal Division.) the Library held $XXX in equity securities. Equity securities are not eligible investments for the Library under Ohio law.

Deposits: Deposits are insured by the Federal Depository Insurance Corporation; [or] collateralized by securities specifically pledged by the financial institution to the Library; (delete if there is no specific pledging) or collateralized by the financial institution’s public entity deposit pool. (delete if no pool is used)

At December 31, 20EE, (Insert other time period noted. Also, disclose as a material violation in the Compliance Report.) $XXX of deposits were not insured or collateralized, contrary to Ohio law.

Investments: (The following MUST be modified, based on the entity’s circumstances. It may be best to discuss the arrangement with a knowledgeable officer of the financial institution.) The Federal Reserve holds the Library’s U.S. Treasury Notes in book-entry form by, in the name of the Library’s financial institution. The financial institution maintains records identifying the Library as owner of these securities.

[The following three sentences describe some repurchase agreements / sweep accounts. However, circumstances may require modification to this disclosure. Also, not all sweep accounts are repurchase agreements. The Library’s financial institution transfers securities to the Library’s agent to collateralize repurchase agreements. The securities are not in the Library’s name.

[The following may describe some equity securities, but you should check with the broker-dealer or financial institution.] A financial institution’s trust department holds the Library’s equity securities in book entry form in the Library’s name.

Investments in STAR Ohio and mutual funds are not evidenced by securities that exist in physical or book-entry form.

3. Budgetary ActivityOAC 117-8 DOES NOT REQUIRE LIBRARIES TO BUDGET RECEIPTS. HOWEVER, SOUND BUDGET PRACTICE SUGGESTS A GOVERNMENT CANNOT APPROPRIATE RESPONSIBLY UNLESS THEY HAVE AN ESTIMATE OF RESOURCES TO SUPPORT THE APPROPRIATIONS. IF THE GOVERNING BODY USES A REVENUE/RESOURCE ESTIMATE TO SUPPORT APPROPRIATIONS, WE CAN INCLUDE IT IN THE TABLE BELOW. A LACK OF EVIDENCE THE GOVERNING BODY USES A RESOURCE ESTIMATE WOULD BE A MANAGEMENT COMMENT.

Budgetary activity for the years ending [End of Years Audited] follows:

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Note: The above is an embedded Excel Spreadsheet. Double-click to edit. Do not enter $ signs.)

Disclose any material budgetary violations here and in the compliance report. The description should list the individual funds affected (i.e., don’t say “the special revenue funds were in violation,” unless all the special revenue funds violated a requirement). The disclosures here should be brief, do not repeat the full text of the citation appearing in the GAGAS report. For example:

Contrary to Ohio law, budgetary expenditures exceeded appropriation authority in the ABC fund by $XXX for the year ended December 31, 20XX. Also contrary to Ohio law, at December 31, 20XX, the XYZ fund had a cash deficit balance of $XXX.

4. Grants-in-aid and Tax Receipts

The primary source of revenue for Ohio public libraries is the Public Library Fund (PLF). The State allocates PLF to each county based on the total tax revenue credited to the State’s general revenue fund during the preceding month. The County Budget Commission bases the amount for distribution on the needs of such library for the construction of new library buildings, parts of buildings, improvements, operation, maintenance, or other expenses. The County Budget Commission cannot reduce its allocation of these funds to the Library based on of any additional revenues the Library receives.

The following applies only when the Library has a tax levy. If the Library does not have a tax levy delete the following:Real property taxes become a lien on January 1 preceding the October 1 date for which the taxing authority of the subdivision to whose jurisdiction the Library is subject adopts rates. The State Department of Taxation, Division of Tax Equalization, adjusts these rates for inflation. Property taxes are also reduced for applicable homestead and rollback deductions. The financial statements include homestead and rollback amounts the State pays as Other Governments’ Grants In Aid. Payments are due to the County by December 31. If the property owner elects to pay semiannually, the first half is due December 31. The second half payment is due the following June 20.

Public utilities are also taxed on personal and real property located within the taxing district.

Property owners assess tangible personal property tax. These owners must file a list of tangible property to the County by each April 30.

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The County is responsible for assessing property, and for billing, collecting, and distributing all property taxes on behalf of the Library.

5. Debt

Note: County library districts and regional library districts can issue any securities authorized by ORC 133. Other libraries can only issue TANs & RANs, though they may have debt issued by the taxing authority of the subdivision to whose jurisdiction the Library is subject. In such instance, the debt is normally a liability of the taxing authority, not the library. Such debt should not be listed here as a library liability. However, consider disclosing that the debt has been issued on the library’s behalf, and whether the library has any contingent obligation for repayment.

Debt outstanding at December 31, 20EE (Insert only the most recent year) was as follows:

(List other indebtedness, such as leases, if material.)(Example note disclosure) The Library issued general obligation bonds to finance the purchase of a new mobile book vehicle. The Library’s taxing authority collateralized the bonds. [Briefly describe other material debt issues, too. Describe collateral pledged (e.g., pledged receipts, a mortgage on the property financed, taxing authority (that is, general obligations), uncollateralized) and other significant matters, including defaults, covenant violations, etc. Describe any defeased debt and the amounts outstanding, but explain the defeased amounts are NOT included in the amortization table below. Also, assure that any trusteed debt service reserve funds are disclosed. You can disclose them in this note if the Library reports them as assets; report them in Note 6 if not “on the books.” Example, if recorded as a Library asset:]

The mortgage revenue bond covenant requires the Library to establish and fund a debt service reserve fund, included as a debt service fund. The balance in the fund at December 31, 20EE is $54,500.

Amortization of the above debt, including interest, is scheduled as follows:

Present amounts due after five years in 5-year increments.

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In addition to the debt described above, the Library has defeased certain debt issues from prior years. Debt principal outstanding at December 31, 20EE (list only most recent year) was $XXX. This disclosure does not include the related defeased debt or assets, since trusteed assets should provide sufficient resources to retire the debt.

6. Debt Service Trust Funds

The mobile book vehicle purchase trust agreement required the Library to establish a debt service fund to be maintained by a custodian bank. The Library has established this fund. At December 31, 20EE, (list most recent year only) the custodian held $XXX in Library assets. The accompanying financial statements do not include these assets or the related receipts and disbursements.

As disclosed in Note 5, the Library has also defeased the Library Renovation 20XX bonds. At December 31, 20EE, (list most recent year only) the custodian held $XXX in Library assets to retire the 20XX bonds.

7. Retirement Systems

(Modify to meet your Library’s situation.) Retirement Rates Year Member

RateEmployer Rate

PERS – Local 2005 8.5% 13.55%PERS – Local 2006 9% 13.7%PERS – Local 2007 9.5% 13.85%PERS – Local 2008 - 2011 10% 14%

(Note: The following two paragraphs are an example.) The Library’s employees belong to the Ohio Public Employees Retirement System (OPERS). OPERS is a cost-sharing, multiple-employer plan. The Ohio Revised Code prescribes this plan’s benefits, which include postretirement healthcare and survivor and disability benefits.

The Ohio Revised Code also prescribes contribution rates. For 20EE and 20BB, OPERS members contributed XX and XX%, respectively, of their gross salaries and the Library contributed an amount equaling XX and XX%, respectively, of participants’ gross salaries. The Library has paid all contributions required through December 31, 20EE. (Most recent year)

8. Risk Management

(Note: Use only the paragraphs that apply. Some of the descriptions below are mutually exclusive, so you must make appropriate modification.)

Commercial Insurance

The Library has obtained commercial insurance for the following risks:

Comprehensive property and general liability; Vehicles; and Errors and omissions.

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The Library is uninsured for the following risks:

Comprehensive property and general liability; Vehicles; and Errors and omissions.

(Insert the following sentence if uninsured losses were material.) During 20EE, the Library paid $XXX for losses that exceeded insurance coverage.

(Also disclose any significant changes in coverage from the prior year.)

Risk Pool Membership

The Library is a member of the XYZ Joint Self Insurance Pool (the Pool). The Pool assumes the risk of loss up to the limits of the (name of subdivision’s) policy. The Pool may make supplemental assessments if the experience of the overall pool is unfavorable. [Modify the preceding sentence as needed.] The Pool covers the following risks:

General liability and casualty; Public official’s liability; and Vehicle.

The Pool reported the following summary of assets and actuarially-measured liabilities available to pay those liabilities as of December 31:

9. Contingent Liabilities

(Modify as needed. Briefly describe potentially material suits. Include the range of potential loss. However, avoid naming plaintiffs. Allow legal counsel to review your draft language before finalizing this report.)

Example The Library is defendant in several lawsuits. Although management cannot presently determine the outcome of these suits, management believes that the resolution of these matters will not materially adversely affect the Library’s financial condition.

(Include the following paragraph only if grants were received.) Amounts grantor agencies pay to the Library are subject to audit and adjustment by the grantor, (if significant federal grants were received continue this sentence with the following) principally the federal government. The grantor may require refunding any disallowed costs. Management cannot presently determine amounts grantors may disallow. However, based on prior experience, management believes any refunds would be immaterial.

10. Related Party Transactions

Example: A Library Trustee is part owner of a company from which the Library acquired (described

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acquisition briefly) during the year. The Library paid $XXX for this acquisition. The Library also uses office space a Trustee donated. Significant* related party transactions must be disclosed. They may be indicative of ethics or other violations, but that is not the purpose of disclosing related party transactions. The concern with FASB 57 is that the nominal amount of a transaction not conducted at arms length may not be indicative of its true value.

* A transaction may be “significant” when the dollar amount is immaterial, if it does not represent the fair value of the transaction. For example, a government may rent a facility to a related party for $1 per year.

11. Subsequent Events

(Describe material debt issuances, uninsured losses, new tax levies or other material revenues or expenditures incurred subsequent to the financial statement date.)

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Insert GAGAS letter

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SCHEDULE OF FINDINGSDECEMBER 31, 20EE AND 20BB

FINDINGS RELATED TO THE FINANCIAL STATEMENTSREQUIRED TO BE REPORTED IN ACCORDANCE WITH GAGAS

FINDING NUMBER 20EE-01

Noncompliance Citation

OR

Significant Deficiency

OR

Material Weakness

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[Entity Name][County Name] CountySchedule of FindingsPage 2

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SCHEDULE OF PRIOR AUDIT FINDINGS[FYE DATE]

FindingNumber

FindingSummary

FullyCorrected?

Not Corrected, Partially Corrected; Significantly Different Corrective Action Taken; or Finding No Longer Valid; Explain

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