agenda announcements changes to gs 159 covid related ... · •announcements •2020 audit reviews...
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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LGC UpdateNCACPA Local Government Conference
June 9, 2020
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State and Local Government Finance Division
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State and Local Government Finance Division
AGENDA
•Announcements•2020 Audit Reviews•Changes to GS 159•COVID Related Resources and Guidance
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
ANNOUNCEMENTS
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State and Local Government Finance Division
ANNOUNCEMENTS•Staff changes:•In Fiscal Management•Kendra Boyle has rejoined staff•Tiffany Anderson has joined•In Debt Management•Biff McGilvray postponed his retirement
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State and Local Government Finance Division
ANNOUNCEMENTS
•LOGOS system – first module was LGC 203•Will be launching June 30 reporting round of 203s on July 1•Next module will be user and unit management
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2020 State Treasurer's Auditing Reporting and Review
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State and Local Government Finance Division
ANNOUNCEMENTS•2020 Contracts•Additional questions added for Yellow Book
compliance•https://www.nctreasurer.com/slg/lfm/forms-
instructions/Pages/Annual-Audit-Forms-and-Resources.aspx•Please be sure to submit contracts through the
contract portal and not the audit report portal
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State and Local Government Finance Division
ANNOUNCEMENTS• Due to COVID-19 pandemic, due date for June 30, 2020 audits has
been extended to 11:59 PM January 31, 2021 with no grace period attached• If interested in being on the agenda for consideration of debt
approval by the LGC beginning in November of each year, you must have your current audit submitted and any findings addressed before we will consider placing you on the agenda• Receipt of audit and application not a guarantee you will be on the
agenda
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State and Local Government Finance Division
LOGOTIN Ready to Roll!• After many delays, project is underway• Phase I will result in system requirements and RFP for
qualified system(s) and identification of those systems• Stakeholder group has been identified and units may be
contacted for input•Will include standardized chart of accounts
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
ANNOUNCEMENTS• DST website was relaunched in December, 2019• https://www.nctreasurer.com/divisions/state-and-local-government-
finance-division
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State and Local Government Finance Division
ANNOUNCEMENTS• Most recent year’s county and municipal audits now available on our
website:• https://www.nctreasurer.com/annual-audit-reports-submitted-local-
government-commission
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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New Funding Round for Loans and Grants to Units Affected by Recent Stormshttps://www.rebuild.nc.gov/recovery-assistance-programs/assistance-local-and-tribal-governments
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State and Local Government Finance Division
2020 Audit Reviews
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State and Local Government Finance Division
Brief Reporting Notes• Continue to see reports where transfers and due tos/from are not
adequately explained in notes• Continue to see reports where transfers are used to account for cost
allocations – this is not GAAP and we will send the report back if we see it• Should be expenditures/expenses in fund to which cost is being allocated and
contra expenditures/expenses in fund that originally paid for the item or service
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
Illustratives, Tables, and Templates
•Pension tables and templates are out for periods ended September 30, 2019 through June 30, 2020 (Measurement date of June 30, 2019)•OPEB not updated at this time• Illustrated financials out this summer
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State and Local Government Finance Division
Changes in 2020 Review Process• Data Input Sheet Changes• Finance Officer will certify that data was prepared in accordance with
instructions and matches audited financials
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State and Local Government Finance Division
Changes in 2020 Review Process
•We are moving away from checking every data element and are relying on local governments and their auditors to make sure data entry is correct
•Capacity issue with Fiscal Management staff
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
Changes in 2020 Review Process• Data input for cities and counties will include 3 years analysis tab
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State and Local Government Finance Division
Changes in 2020 Review Process
•Tourism Development Authorities and Housing Authorities will no longer be required to submit data input forms• Substantial changes coming to transmittal document•Be on lookout for more detailed guidance coming
soon!
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
Potential Changes for 2021• LGC is in process of asking for rule changes that will affect the 2021
audit process and beyond:• Classify all audit contracts as variable fee contracts, base 75% interim
invoice cap on total of previous year’s actual fees• Require auditors to present results of audit in public meeting,
including a discussion of all findings and unit’s financial performance as measured against benchmarks set by LGC staff – these calculations will be made for auditors at time the Unit Data From Audit form (FKA data input sheet) is submitted
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State and Local Government Finance Division
Potential Changes for 2021
• Require units to respond in writing to LGC regarding findings and financial indicators as presented by auditor; LGC will no longer routinely issue unit letters• Public hearing on July 21 – phone hearing from 2:00 – 3:00
PM
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State and Local Government Finance Division
Implementation of Changes to G.S. 159
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
2019 Changes to LGBFCA – GS 159; SL 2019-19• Clarified that local units must have a finance officer, and that they can
contract out almost all of the responsibilities of the position (responsibility for fulfilling duties still lies with the finance officer) (159-24 and 159-25(a)(9))• Authorized the LGC to adopt rules setting the minimum requirements to be
a finance officer (159-25(c))
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State and Local Government Finance Division
2019 Changes to LGBFCA – GS 159; SL 2019-19
• Gives the LGC the authority to require training for the finance officer in certain circumstances (159-25(d))
• Gives the LGC the authority to require a local government to contract with a party external to the unit to perform some or all of the duties of the finance officer when the unit has received a letter of notification about deficiencies with the requirements of GS 159 (159-25(e))
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State and Local Government Finance Division
2019 Changes to LGBFCA – GS 159; SL 2019-19
•How Will We Implement?•Proceed immediately with implementing LGC’s
authority to require a unit to contract for services (159-25(e))
•Develop rules (via Administrative Code) that allow the LGC to:• Establish minimum qualifications for finance officer (159-25(c))
• Require participation in training (159-25(d))
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
2019 Changes to LGBFCA – GS 159; SL 2019-19
• How Will We Implement 159-25(e)? (LGC authority to require units to contract for services)
• Original plan was to implement with 17 municipalities two or more years delinquent with annual audits• January - Initial letter to unit, management, full board, attorney,
and appropriate advocacy group, requesting detailed explanation and plan to address, including timetable• February - Evaluate responses for adequacy and monitor units
with acceptable responses; 4 units sent notices of intent in early March to implement the statute
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State and Local Government Finance Division
2019 Changes to LGBFCA – GS 159; SL 2019-19•Once pandemic arrived in NC, placed project on hold
temporarily
• June LGC meeting issued two more notices of intent
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State and Local Government Finance Division
2019 Changes to LGBFCA – GS 159; SL 2019-19•Why is this important?•Critical that units and LGC staff have current financial
information to assess financial condition•Without functioning accounting systems, units are
susceptible to poor financial decisions, lack of compliance with other requirements of the LGBFCA, or worse, fraud•Audits that are stale lose their usefulness
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
COVID-19 Related Changes and Guidance
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State and Local Government Finance Division
COVID Specific Guidance and Resources
• The Balance Sheet – LGC staff blog:• Best way to keep up with current guidance
https://www.nctreasurer.com/state-and-local-government-finance-division/local-government-commission/balance-sheet
• COVID-19 Resource Page• Best page for links to all think related to financial impacts of COVID-19
https://www.nctreasurer.com/local-government-covid-19-resources
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State and Local Government Finance Division
COVID Specific Guidance and Resources
• Session Law 2020-3 included provisions related to COVID-19•Modified daily deposit requirement during emergency
declaration issued under G.S.166A-19.20 ONLY• 159-32(a) modified to allow units some relief from daily
deposit requirement if it is not possible for them to meet the requirement. •Must deposit at least weekly and in the interim hold funds
in a secure location
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
COVID Specific Guidance and Resources• New reporting requirement, modifying G.S. 159-33.1, AFIR statute• Required report will not be part of AFIR; will design separate report
template• Statement of financial information concerning the impact of COVID-19• Due 2/15/2021 and shall include monthly data for the time period of July 1,
2019,through December 31, 2020,on the following:• utility payments, including water, sewer, and electric, • reductions in tax revenue,• reductions in services due to reductions in tax revenue,• total revenues received from building inspections, by type,• the ability to meet debt service obligations,• the balances of any capital reserve funds, • the purpose of any withdrawals from capital reserve funds and• any other information prescribed by the secretary.
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State and Local Government Finance Division
Accounting Guidance for COVID-19 Funds• CARES Act (CRF) Funding:• Best to keep in Special Revenue Fund to keep segregated• Separate functions should be accounted for separately using account
structure• Must be budgeted• Investment earnings follow grant funds• Anything not spent by December 30, 2020 will be returned to Department of
Treasury• Use is restricted to specific public health emergencies as detailed in the
federal Social Security Act• CANNOT be used to backfill lost revenue at this time
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State and Local Government Finance Division
Accounting Guidance for COVID-19 Funds• CARES Act funds are considered federal financial assistance • Assigned a CFDA No. 21.019• Program name “Coronavirus Relief Fund” • Granting agency is the US Department of Treasury. • CARES Act funds are subject to federal single audit requirements found in
subpart F of the Uniform Guidance (2 CFR 200)• Payments are subject to Uniform Guidance sections regarding internal
controls (§200.303) and subrecipients monitoring and management (§§200.330 to 332). • Other subparts of the Uniform Guidance are excluded, including 2 CRF Part
200 Subpart D procurement requirements found in 2 CFR §§ 200.317-326
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
Accounting Guidance for COVID-19 Funds•Modified Accrual Revenues:• Accrual of shared revenues – no change – still accrue for
60-90 days depending on your determined availability period•Motor vehicle registration renewals and related property
taxes are deferred but units should not accrue as receivable since not receivable until the owner renews registration• Still accrue anything collected by June 30 but not paid to
unit until July or August
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State and Local Government Finance Division
Accounting Guidance for COVID-19 Funds
•Modified Accrual Expenditures:• Some deferrals and effective deferral of due dates on
payroll taxes• Effective deferral by NCDOR of remittance of employer
share of withholding taxes by eliminating penalties but actual due date for the tax did not change so should be accrued at June 30 if owed• Actual deferral in CARES Act of employer share of social
security tax but any amount owed at June 30 also should be accrued
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State and Local Government Finance Division
Accounting Guidance for COVID-19 Funds• Utility Revenues:• EO 124 and EO 142 are expected to negatively impact revenues for
utility operations including charges for services and late/disconnect/reconnect fees• Units will need to evaluate allowances for doubtful accounts to
ensure that estimates are reasonable• If material, accounts receivable should be recognized for amounts
that have been deferred under these orders
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2020 State Treasurer's Auditing Reporting and Review
6/18/2020
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State and Local Government Finance Division
Accounting Guidance for COVID-19 Funds• Other resources:• GASB Emergency Toolbox • https://www.gasb.org/cs/Satellite?c=Page&cid=1176174469582&pagename=
GASB%2FPage%2FGASB%2FSectionPage
• GFOA Coronavirus Resource Center• https://www.gfoa.org/covid-19-response-resources• Fiscal Resources Center• https://www.gfoa.org/fiscal-first-aid
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State and Local Government Finance Division
Sharon Edmundson919-814-4289
Sign up for our blog –The Balance Sheethttps://www.nctreasurer.com/slg/lgcblog/Pages/default.aspxClick on “Sign Up” at top of page
Division Phone (919) 814-4300Division email [email protected]
This Photo by Unknown Author is licensed under CC BY-NC
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