Cherokee County Board of Commissioners FINANCIAL UPDATE FY2014 Audit & CAFR Overview CAFR – C omprehensive A nnual F inancial R eport Presented by Janelle Funk 4/21/2015
Cherokee County Audit & CAFR Overview Why Do We Do It? How Is it Done? • State law requires local governments to publish a complete set of audited financial statements each year. (O.C.G.A. § 36 ‐ 81 ‐ 7) State Law • The County receives federal assistance through various grant programs and is therefore required to undergo an annual “Single Audit” in conformity with the Federal provision of OMB Circular A ‐ 133. Requirements • Exam, on a test basis , the amounts and disclosures in the financial statements. • Assess accounting principles and significant estimates used. How Do • Perform tests of internal controls. Auditors Conduct • Evaluate the overall financial statement presentation. Audit: • Obtain reasonable assurance the financial statements are free of material misstatement. • Report county’s compliance with A ‐ 133 requirements that could have a direct Auditors and material effect on County’s major federal programs. Duty: 2
Cherokee County Audit & CAFR Overview Overview of the Process Finance Team closes financial statements at end of fiscal year (Final, Pre ‐ Audit Results) Auditors perform audit on closed financial statements Auditors discuss concerns with Finance & recommend adjustments Finance makes adjustments to financial statements County’s General Ledger now reflects Final, Post ‐ Audit Results CAFR is prepared 3
Cherokee County Audit & CAFR Overview 3 Types of Auditor’s Opinions Unmodified (“Clean”) – financial statements are fairly presented in all material respects and comply with GAAP Modified – not necessarily negative, could be limited scope or unable to verify information Adverse - indicates serious problems with the audit, and can be very damaging to the County’s reputation and financial position 4
Cherokee County Audit & CAFR Overview FY2014 Audit Opinion Independent Auditor’s Report Cherokee County Received: Unmodified (“Clean”) – financial statements are fairly presented in all material respects and comply with GAAP 5
Cherokee County Audit & CAFR Overview What’s Done? What’s Next? What’s Done: 1. CAFR on County website 2. CAFR has been submitted to several entities including: a) State Department of Audits and Accounts b) Georgia Department of Human Services c) CVIOG website (“TED”) d) ARC e) Banks, Bondholders, Rating Agencies, Bond Insurer f) GDOT g) Other agencies administering grants 3. Similar information submitted to DCA What’s Next 1. Submitting our CAFR to the GFOA to be considered for GFOA’s Certificate of Achievement for Excellence in Financial Reporting 2. State of Georgia should issue letter indicating acceptance of our CAFR (or corrections required before acceptance) in May 2015 6
Cherokee County received the GFOA Certificate of Achievement for Excellence in Financial Reporting for last year’s CAFR. We will submit for the award again for FY2014. 7
Cherokee County Audit & CAFR Overview Basic Financial Statements ‐ Excerpt 20 Bottom Line: The CAFR is a 165 page document, mostly comprised of very technical accounting information. 8
Cherokee County Audit & CAFR Overview Funding Sources The is no consolidated report Total Funds comparing Budget to Actual results in $3.9M Better Than Budget the CAFR. $193.5 This chart is the result of summing $189.6 results reported on pgs 21 ‐ 23 and 70 ‐ $195 78 of the CAFR. $190 We also present this information in $185 our CAFR’s Transmittal Letter. $180 $175 The biggest drivers of this $3.9M positive variance: $170 • UnCS Fund ‐ $1.5M $165 • Insurance Premium Tax, Building $160 Permits, COED Land Sale $155 • SPLOST ‐ $2.3M $150 • Sales Taxes > Budget Budget Actual Bottom Line: Almost all funds met or exceeded the revenue budget, or if not, trimmed expenditures to match revenues, or had adequate reserves to fund operations. 9
Cherokee County Audit & CAFR Overview Funding Sources This chart is the result of summing General Fund Revenues and Other Funding Sources $0.1M Less Than Budget on pages 21 & 22 of the CAFR. The most significant variances include: $61.5 $61.6 TAVT/MV +$0.5M • $65 • Mortgage Related Taxes +$0.4M $60 • Property Taxes +$0.3M • Other Taxes +$0.2M $55 • Other Misc +$0.2M $50 Court Fines ‐ $0.2M • • Sale of Old Admin Bldg ‐ $1.6M $45 $40 $35 $30 Budget Actual Bottom Line: The General Fund was properly funded for operations. 10
Cherokee County Audit & CAFR Overview Expenditures & Other Funding Uses Total Funds Operating Funds $12.7M Under Budget $3.7M Under Budget $128.4 $124.7 $130 $174.5 $120 $180 $110 $100 Budget Actual $170 $161.8 Capital Funds $9.0M Under Budget $160 $46.1 $37.1 $60 $50 $150 $40 $30 Budget Actual Budget Actual Bottom Line: Only two funds exceeded the budget, but by less than $3,000. The CAFR confirms this in Note 2: Legal Compliance – Budgets on page 39. 11
Cherokee County Audit & CAFR Overview Expenditures & Other Funding Uses General Fund This chart is the summary of information found on pages 21 & 22 of $1.5M Under Budget the CAFR. The General Fund spent 98% of the $61.7 Budget. $70 $60.2 The most significant variances include: $60 • Sheriff Office ‐ $0.4M • Judicial Services ‐ $0.4M County Attorney ‐ $0.2M • $50 • Tax Commissioner ‐ $0.1M • Property Management ‐ $0.1M $40 $30 Budget Actual Bottom Line: The General Fund expenditures did not exceed the Budget. 12
Recommended Reading Transmittal Letter Provides background and context of CAFR CFO is “transmitting” the report to intended users and covers: * Profile of Government * Economic Condition (Employment, Industry Mix, Population Statistics) * Major Initiatives * Overview of Current Year Results 13
Cherokee County Board of Commissioners Appendix Overview of a CAFR 14
CAFR Overview – Are We Required To Prepare A CAFR? Need 3 things to comply GAAP, however, encourages the with GAAP: production of the broader 1. Management Discussion presentation in the format and Analysis (MD&A) of CAFR. 2. Basic Financial Statements 3. Required Supplementary Information (RSI) CAFR – C omprehensive A nnual F inancial R eport 15
CAFR Overview – CAFR vs. Basic Financial Statements General information on the government’s structure, Introductory services, and environment Section + Management’s Discussion and Analysis Mandatory Reporting Government-wide Financial Statements (GAAP) Government Fund Financial Statements Proprietary Fund Financial Statements Financial CAFR Fiduciary Fund Financial Statements Section Notes to the Financial Statements Additional Required Supplementary Information Information on individual funds and discretely presented component units and other supplementary information not required by GAAP + Trend data and non-financial data Statistical Section 16
CAFR Overview – 3 Major Sections Introductory Section Financial Section • Transmittal Letter Statistical • List of Principal Officials Section • Organizational Chart • Auditor’s Opinion • Management Discussion and Analysis (MD&A) • Basic Financial Statements • Financial Trends • Notes • Revenue Capacity • Required Supplementary • Debt Capacity Information • Demographics and • Other Information Economy (Combining & Individual • Operating Information Statements) 17
CAFR Overview ‐ Introductory Section Transmittal Letter Provides background and context of CAFR CFO is “transmitting” the report to intended users and covers: * Profile of Government * Economic Condition (Employment, Industry Mix, Population Statistics) * Major Initiatives * Awards & Acknowledgements 18
CAFR Overview – Financial Section Management Discussion & Analysis (MD&A) • Narrative Overview Preceding Financial Statements • GASB’s Intent: • Financial Information should be Relevant to Users and Reliable • Information Should be Understandable to Knowledgeable Users The MD&A Should… • Be Objective, • Be Easily Readable*, and • Provide and Assess the Year ‐ Over ‐ Year Financial Position 19
CAFR Overview – Financial Section Basic Financial Statements • Government ‐ wide Financial Statements • Accrual based • Includes Components Units • Long ‐ Term Focus • Fund Financial Statements • Modified Accrual • Short ‐ Term Focus • Budget v Actual Comparisons • Names of Statements Are Different But… • Reporting of Assets, Liabilities, Revenues, Expenditures 20
CAFR Overview – Financial Section Notes To Financial Statements 1. Summary of Significant Accounting Policies 2. Budgetary Information 3. Government-Wide to Fund Financial Stmt Reconciliation 4. Deposits & Investments 5. Receivables 6. Capital Assets 7. Short-Term Borrowings 8. Long-Term Debt 9. Interfund Activity 10. Defined Benefit Pension Plan 11. Defined Contribution Plan 12. Other Post Employee Benefits The notes to the 13. Risk Management financial statements 14. Commitments and Contingent Liabilities provide greater 15. Hotel/Motel Lodging Tax clarity to the numbers. 16. Restatement of Prior Year Balances 21
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