Presentation of 2015 Audit Results Cherokee County, Georgia September 30, 2015
25252atl. Agenda Engagement Team Results of the 2015 Audit Financial Ratios Comments, Recommendations, and Other Issues Questions & Comments 1
25252atl. Engagement Team Mauldin & Jenkins, LLC; General Information Founded in 1920. Large regional firm serving the Southeastern United States. Offices located in Macon, Atlanta, Albany, Bradenton, Chattanooga, and Birmingham employing approximately 260 personnel. In addition to our governmental practice, we have large banking, healthcare, not-for-profit, benefit plan and tax practices. Mauldin & Jenkins, LLC; Governmental Sector Largest specific industry niche served by the Firm representing 25% of Firm practice. Serve more governmental entities in Georgia than any other firm requiring over 65,000 hours of annual service. Approximately 90 professional staff persons with current governmental experience. Current auditor for over 300 total governments in the Southeast, including approximately: 37 State entities; 75 cities; 40 counties; 40 school systems; 90 special purpose entities; and, 77 governments receiving the GFOA’s Certificate of Excellence for in Financial Reporting. Engagement team leaders for the Cherokee County James Bence, Engagement Partner – 13 years of experience, 100% governmental Doug Moses, Engagement Quality Control Partner – 17 years of experience, 100% governmental Josh Carroll, Engagement Manager – 10 years of experience, 100% governmental Justin Davis, Engagement Senior – 2 years of experience, 100% governmental 2
25252atl. Results of 2015 Audit Our Responsibility Under Auditing Standards Generally Accepted in the United States of America (GAAS) – We considered the internal control structure for the purpose of expressing our opinion on the County’s basic financial statements and not providing assurance on the internal control structure. – Our audit was performed in accordance with GAAS. – Our objective is to provide reasonable—not absolute—assurance that the basic financial statements are free of material misstatement. – The basic financial statements are the responsibility of the County’s management. Report on 2015 Basic Financial Statements – Unmodified (“clean”) opinion on basic financial statements. – Presented fairly in accordance with accounting principles generally accepted in the United States of America. – Our responsibility does not extend beyond financial information contained in our report. 3
25252atl. Results of 2015 Audit (continued) Comprehensive Annual Financial Report – A Comprehensive Annual Financial Report (CAFR) goes beyond the normal financial reporting required by accounting principles generally accepted in the United States. A CAFR includes at a minimum the following elements/sections: • Introductory Section provides general information on the County’s structure and services: » Includes Letter of Transmittal, Organizational Chart, List of Principle Officials, and a copy of the prior Certificate of Achievement for Excellence in Financial Reporting. • Financial Section includes the basic financial statements, footnotes, and required supplementary information » Also includes the Independent Auditor’s Report and Management’s Discussion & Analysis • Statistical Section includes a broad range of financial, demographic, and operational information for past ten years Is above and beyond what is required for the annual financial reporting! – 159 counties in Georgia, only 33 received the award in 2014 ~ 21% – 1 of 141 entities in the State of Georgia to receive in 2014 – County has received the award eleven times 4
25252atl. Financial Highlights – General Fund Revenues increased approximately $3.4 million to close the year at $65.6 million. 5
25252atl. Financial Highlights – General Fund (continued) Expenditures increased approximately $3.6 million to close the year at $58.3 million. 6
25252atl. Financial Highlights – General Fund (continued) General Fund fund balance closed at $13.4 million compared to $11.2 million in prior year. Approximately 99% of fund balance is unassigned Unassigned is 22.8% of expenditures ~ 2.7 months of operations 7
25252atl. Financial Highlights – County Wide Assets: The County’s assets decreased approximately $81.6 million or 7.21% from $1.214 billion to $1.132 billion. This o decrease can be attributed to the decrease in property taxes receivable and continued depreciation of County infrastructure. Liabilities: The County’s liabilities decreased from $218.8 million (as restated) to $152.5 million. The decrease is primarily o attributed to the County's reduction of long-term debt and the reduction of the unearned property taxes of $61.6 milliion. Net Position: The County’s equity position decreased from approximately $997.7 million (as restated) to $982.6 million. o Largest portion of the County’s net position is capital assets net of related debt ~ $945.4 million of $982.6 million The County is reporting deficit unrestricted net position of $33.6 million Revenues & Expenses: Program revenues increased from $45.4 million to $47.7 million ~ an increase of 5.2%. o General revenues increased from $115.8 million to $129.1 million ~ an increase of 11.5%. o Total expenses increased from $184.2 million to $191.9 million ~ an increase of 4.2%. o 8
25252atl. Required Communications Significant Accounting Policies – The significant accounting policies used by the County are described in Note 1 to the basic financial statements. – County implemented GASB Statements 68 and 71 related to pensions • Restated opening balances ~ $34 million for net pension liability and related deferred outflows of resources – The policies used by the County are in accordance with generally accepted accounting principles and typical government organizations. – In considering the qualitative aspects of its policies, the County is not involved in any controversial or emerging issues for which guidance is not available. Management Judgment/Accounting Estimates – The County uses various estimates as part of its financial reporting process – including valuation of accounts receivable. – Management’s estimates used in preparation of financial statements were deemed reasonable in relation to the financial statements taken as a whole. We considered this information and the qualitative aspects of management’s calculations in evaluating the County’s significant accounting estimates. Financial Statement Disclosures – The footnote disclosures to the financial statements are also an integral part of the financial statements and the process used by management to accumulate the information included in the disclosures was the same process used in accumulating the statements. The overall neutrality, consistency, and clarity of the disclosures was considered as part our audit. 9
25252atl. Required Communications (continued) Relationship with Management – We received full cooperation from the County’s management and staff. – There were no disagreements with management on accounting issues or financial reporting matters. Audit Adjustments – Adjustments were proposed to the records of the County and have been recorded in the County’s financial statements and are available with this presentation. Management Representation – We requested, and received, written representations from management relating to the accuracy of information included in the financial statements and the completeness and accuracy of various information requested by us. Consultation with Other Accountants – To the best of our knowledge, management has not consulted with, or obtained opinions from, other independent accountants during the year, nor did we face any issues requiring outside consultation. 10
25252atl. Required Communications (continued) Significant Issues Discussed with Management – There were no significant issues discussed with management related to business conditions, plans, or strategies that may have affected the risk of material misstatement of the financial statements. Information in Documents Containing Audited Financial Statements – Our responsibility for other information in documents containing the County’s basic financial statements and our report thereon does not extend beyond the information identified in our report. If you intend to publish or otherwise reproduce the financial statements and make reference to our firm, we must be provided with printers’ proof for our review and approval before printing. You must also provide us with a copy of the final reproduced material for our approval before it is distributed. Auditor Independence – In accordance with AICPA professional standards, M&J is independent with regard to the County and its financial reporting process. – There were no fees paid to M&J for management advisory services during 2015 that might effect our independence as auditors. 11
25252atl. Comments, Recommendations, and Other Issues Recommendations for Improvements Findings and deficiencies – We have met with management, discussed causes and solutions – Management has provided corrective action plans to address in future Management Points - We have met with management, discussed causes and solutions 12
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