Property Valuation Administrator

How to Get Rid of Your Auditor FasterAuditor of Public AccountsOctober 31, 2012

Overview - Continued

Agreed-Upon Procedures – What are the Procedures and What

Records do You Need to Have Available

What is an Agreed-Upon Procedures Engagement?

An agreed-upon procedures engagement is one in which a practitioner is engaged by a client to perform specific procedures and report findings. The practitioner does not perform an examination or provide an opinion. Rather, the practitioner reports only procedures and findings.

Agreed-Upon Procedures -PVA

1. Determine if the PVA has a receipt ledger, a disbursement ledger, and reconciles bank records to books each month. Re-perform the year-end bank reconciliation (June 30, 20__), to determine if amounts are accurate.

PVA Records Needed

Receipts LedgerDisbursements LedgerBank ReconciliationBank Statements

Receipts and Disbursements Ledger

Ledgers Should be detailed and Accounts should

match Budget Line-Items▪ Example of Accounts▪ Revenues: County Budgeted Statutory Contribution,

City Payments, Interest, Copy Charges, etc..▪ Expenditures – Personnel Cost, Office Supplies,

Telephone Charges, In-State Travel, Etc…

Bank Reconciliation

Performed MonthlyReconcile Bank to LedgersDocumented

Agreed-Upon Procedures -PVA

2. Confirm any and all payments by the city to the PVA. Compare recorded city receipts to confirmed payment amounts obtained from city governments. Also review the list of city receipts for completeness.

Agreed-Upon Procedures -PVA

3. Confirm any and all payments made by the fiscal court to the PVA. Compare the budgeted statutory contribution by fiscal court to the legally required amounts calculated by the Department of Revenue. Trace the fiscal court payments from the fiscal court statutory contribution budget account to the PVA’s local bank account.

Records Needed

Detailed Receipts LedgerBank StatementsRevenue’s Statutory Contribution

Letter

Receipts

Any collection of any public funds should be documented by the preparation of a prenumbered receipt (KRS 64.840)

Receipts (Continued)

All Public Funds Received Should Be Deposited Into The Official Bank Account On A Daily Basis

The Daily Deposit Should Be Reconciled To Receipts Ledger

Agreed-Upon Procedures -PVA

4. Judgmentally select 15 disbursements from PVA records and agree amounts to cancelled checks, paid invoices or other supporting documentation. Determine if the expenditure is for official business. Review all credit card statements (If Any) to determine if expenditures are for official business.

Records Needed

Detailed Disbursements LedgerBank StatementsCancelled Check (Front and Back of

Check)Original Bill, Invoice, or Detailed

ReceiptOriginal Contract or AgreementCredit Cards:

▪ Credit Card Statement – Not Enough▪ Need the Supporting Documentation for the

Purchase▪ Original Bill, Invoice, or Detailed Receipt

4. Disbursements (Continued)

Allowable Expenditures

Dept. of Revenue Policy Amendment - PVA Office Allowable Expenditures – PVAAllowableExpenditures.pdf

4. Disbursements (Continued)

Allowable Expenses Necessary for the Office Beneficial to the public/county Not personal in nature Reasonable in amount and content

4. Disbursements (Continued)

Non-allowable Expenditures:

Any non-allowable expenditures found will have to be reimbursed by the PVA from Personal Funds.

Agreed-Upon Procedures -PVA

5. Compare capital outlay disbursements with cancelled checks, supporting documentation, and proper purchasing procedures. Verify the location of newly acquired assets. Determine if Assets were added to the PVA’s Capital Asset Inventory List.

Records Needed

Detailed Disbursements Ledger Bank Statements Cancelled Check (Front and Back of

Check) Original Bill, Invoice, or Detailed Receipt Original Contract or Agreement Credit Cards:

▪ Credit Card Statement – Not Enough▪ Need the Supporting Documentation for the

Purchase▪ Original Bill, Invoice, or Detailed Receipt

PVA Inventory List

5. Capital Outlay - Continued

Guidelines for the purchase of Capital Assets are established through the respective county procurement codes and/or, if chosen, the State procurement procedures.

The PVA should update annually the Office Inventory based on purchases, surplus, and disposals.

Agreed-Upon Procedures -PVA

6. Scan vehicle lease agreements, personal service contracts, and professional service contracts for cost schedules and compare to actual payments. Determine if services received were appropriate, for official business, and properly authorized.

Records Needed

Original Agreement or ContractDisbursements LedgerCancelled Checks

Agreed-Upon Procedures -PVA

7. Compare PVA’s final budget to actual expenditures to determine if PVA overspent in any account series.

Records Needed: Original Budget Final Amended Budget Detailed Disbursements Ledger

7. Budget (Continued)

The PVA office budget governs the use of all PVA office funds.

All funds should be accounted for in the PVA’s Budget

The PVA is required to amend the original budget when expenditures in an account series exceed the budgeted amount.

Agreed-Upon Procedures -PVA

8. Determine whether collateral is necessary for the PVA’s funds. If necessary determine if the PVA was sufficiently collateralized for the year and if a collateral agreement exists.

Records Needed: Bank Statements Written Collateral Agreement(If

Necessary)

8. Collateralization – Pledges of Securities (Continued)

When are Pledges of Securities necessary? FDIC coverage is limited to $250,000. If

funds on deposit are over $250,000 the depository institution should pledge or provide sufficient collateral (Note $250,000 changes Dec. 31, 2009)

Deposit of the same type at same bank share the same $250,000 of FDIC insurance

8. Collateralization – Pledges of Securities (Continued)

According to KRS 66.480(1)(d) and KRS 41.240(4), the depository institution should pledge or provide sufficient collateral which, together with FDIC insurance, equals or exceeds the amount of public funds on deposit at all times.

8. Collateralization – Written Agreement (Continued)

Should the PVA have a written Collateral Security Agreement?

YES, if funds on deposit are ever over $250,000.

8. Collateralization – Written Agreement (Continued)

According to federal law, 12 U.S.C.A. § 1823(e), this agreement, in order to be recognized as valid by the FDIC, should be (a) in writing, (b) approved by the board of directors of the depository institution or its loan committee, which approval must be reflected in the minutes of the board or committee, and (c) an official record of the depository institution.

Agreed-Upon Procedures -PVA

9. Determine whether timesheets are completed, maintained, approved, and support hours worked.

Records Needed – Daily time and attendance reports

(DTAR) Detail of Approval Process

Agreed-Upon Procedures -PVA

10. Determine whether cash balances were property transferred from former PVA to new PVA.

Records Needed – Revenue Closeout Package Bank Statements

Agreed-Upon Procedures -PVA

11. For newly hired employees, during July 1, 20__ through June 30, 20__, of the PVA office determine if the Ethics Certification Form has been completed and is on file.

Records Needed: List on All New Employees Ethics Form -

09CodeofEthicsCertification42007.pdf

Agreed-Upon Procedures -PVA

12. Determine if the PVA’s office was closed any day other than the state’s approved holidays. If so, determine if the proper procedures and forms were completed.

Records Needed: List of Days Closed PVA Closing Form -

2007CLOSINGSOFTHEPVAOFFICEForm326072.doc

List Of PVA Accounting Records Needed for Audit

Bank Statements Bank Reconciliations Paid Invoices or Bills Cancelled Checks

(Front and Back) Agreements and

Contracts Inventory List New Employees List Office Closing Dates

Deposit Tickets Disbursement Ledger Receipts Ledger Copy of Fiscal Court

Statutory Contribution Budget Account

Ethics Forms PVA Office Closing

Form Collateral Security

Agreement

List Of PVA Accounting Records Needed for Audit (Continued)

Revenue Cabinet Request for Deputy Salary Allocation

Final Approved Budget Time Sheets

Note: Additional items may be need, however the above items are the items we would like for the PVA to have ready upon out arrival.

APA Contact Information

Auditor of Public Accounts209 St. Clair StreetFrankfort, KY 40601

502-564-5841

Beth Francis – Central KentuckyGlen Thompson– Northeast KentuckyBobby Bowling - Southeast KentuckyCharlene Daniels – Western Kentucky