REVIEW OF YEAR-END CLOSING PROCEDURES

Transcription

1 REVIEW OF YEAR-END CLOSING PROCEDURES 2014 Municipal Clerk s Institute Presented by; Magda Nelson, Lead Fiscal Accounting Officer LOCAL GOVERNMENT SERVICES BUREAU

2 Procedures We Will Review Perform closing procedures Revenue Accruals/Due From Other Governments Long-term Debt Negative account balances Expenditure/Expense Accruals/Short-Term Payables Transfers In/Transfers Out Beginning fund balances Inventory & Capital assets Review revenue coding Cash Receivables and other asset accounts Ready to prepare Annual Financial Report

3 NEGATIVE BALANCES Asset accounts Should have Debit balance Identify and correct accounts with credit balances Review Trial Balance, all accounts, for each fund Deferred Outflow of Resources accounts Liability accounts Should have Debit balance Identify and correct accounts with credit balances Should have Credit balance Identify and correct accounts with debit balances Deferred Inflows of Resources accounts Should have Credit balance Identify and correct accounts with debit balances

4 NEGATIVE BALANCES Review Trial Balance, all accounts, for each fund Revenue & Other Financing Source accounts Expenditure/ Expense & Other Financing Use accounts Should have Credit balance Identify and correct accounts with debit balances Should have Debit balance Identify and correct accounts with credit balance

5 09/27/13 TOWN OF ANYWHERE Page: 1 of 1 13:59:06 Trial Balance with Revenues and Expenditures - Summarized Report ID: LB201 For the Accounting Period: 13 / GENERAL Debit Balance Credit Balance Cash - Operating 142, Cash - Investment / Savings Account 198, Petty Cash Taxes Receivable - Mobile Home Taxes Receivable - Mobile Home Taxes Receivable - Mobile Home Taxes Receivable - Real Taxes Receivable - Real , Taxes Receivable - Personal Taxes Receivable - Personal Taxes Receivable - Personal , Protested Tax Receivable , Accounts Payable 5, Deferred Revenue - Real Prop Tax 10, Deferred Revenue - Personal Prop Tax 5, Deferred Revenue - Protested Prop Tax 2, Deferred Revenue - Mobile Homes Unreserved Fund Balance 335, Real Property Taxes Personal Property Taxes 247, , Mobile Homes Local Option Tax 43, CDBG/HOME 4, City Courts 19, MISCELLANEOUS REVENUE 2, Investment Earnings Salaries and Wages 4, Employer Contributions Salaries and Wages 30, Employer Contributions 4, Salaries and Wages 104, Employer Contributions 32, Machinery & Equipment 134, Total 674, ,070.06

6 BEGINNING FUND BALANCES To Prior Year Audit Report Agree beginning Fund Balances/Net Position per accounting system If not audited in prior year To Prior Year Annual Financial Report

7 CASH Fair value adjustments Record interest earnings and/or increases/decreases to fair value of investments to accounting system as of June 30 th Cash reconciliation Should always be performed monthly. Agree June cash reconciliation to total cash per accounting system as of June 30th Pledged securities Assure amounts in pledged security letters are sufficient to cover uninsured amounts. Request new letter if deficient.

8 CASH Negative cash balance in fund Review all cash accounts in all funds for negative cash balances as of June 30 th. Make adjusting entry to eliminate negative cash balance in fund. Lending Fund - Debit Due from other funds (from gas tax fund) Credit Cash Receiving Fund - Debit Cash Credit Due to other funds/general

9 CASH Restricted cash balances in proprietary funds Review current year restricted cash requirements per bond documents as of June 30 th.. Make adjusting entry to increase/decrease restricted cash amounts, if necessary. Increase - Debit XXX Restricted for future debt/replacement & depreciation Credit Cash Decrease - Debit Cash Credit XXX Restricted for future debt/replacement & depreciation

10 CASH Restricted net position balances in proprietary funds Review restricted net position account balances. Make adjusting entry to agree restricted net position account amounts to restricted cash amounts, if necessary. Increase - Debit XXX Restricted for future debt/replacement & depreciation Credit Unrestricted net position Decrease - Debit Unrestricted net position Credit XXX Restricted for future debt/replacement & depreciation

11 RECEIVABLE & OTHER ASSET ACCOUNTS Taxes/Assessments Receivable Assure total taxes/assessments receivable, all 1 funds, per accounting system agree to total taxes receivable per County Trial Balance report(s). 2 Compare taxes/assessments receivable and deferred tax revenue, in each governmental fund, to make sure that they agree.

12 RECEIVABLE & OTHER ASSET ACCOUNTS Special Assessments Receivable-Deferred 1 Agree special assessments receivabledeferred balance in governmental fund(s) as of June 30 th to total unbilled amount per amortization schedules of all assessment payers as of June 30 th. Compare special assessments receivabledeferred and deferred tax revenue, in each 2 governmental fund, to make sure that they agree.

13 RECEIVABLE & OTHER ASSET ACCOUNTS Due From other Governments 1 Review any funds with negative fund balances for potential grant revenue accrual. 2 All "due froms other governments" must be supported by documentation such as grant reimbursement reports. Assure due from other governments & revenues from all outstanding grant reimbursement reports are recorded in the same fiscal year the expenditure/expense was incurred. DR-due from other gov t & CR-grant revenue

14 RECEIVABLE & OTHER ASSET ACCOUNTS Accounts Receivable & Notes/Loans Receivable 1 Agree ending account receivable balances in fund(s) to total balances owing as of June 30 th per utility billing aged receivable reports/subsidiary ledgers. Determine if total prepaid account balances in 2 business-type funds are material. If yes, reclassify to revenues collected in advance, a liability account. 3 Agree Notes & Loan receivable balances in fund(s) to balances owing as of June 30 th per amortization schedule(s).

15 RECEIVABLE & OTHER ASSET ACCOUNTS Inventory 1 Determine if cost of supplies on hand at year end for repairs & maintenance are material. If yes, should be reported as inventory, an asset. Expenditure/expense should be recognized in the fiscal year used. 2 Perform inventory valuation at year end. Update listing to reflect value of year end inventory. 3 Adjust inventory amount in fund as of June 30 th to agree to amount per listing..

16 RECEIVABLE & OTHER ASSET ACCOUNTS Prepaid Expenses 1 Need documentation to support prepaid expense balances. (Usually invoice paid showing dates of coverage). 2 Adjust to expense if necessary.

17 1 st Step 2 nd Step 3 rd Step 4 th Step 5 th Step Agree ending balances per prior year depreciation schedule to amounts reported in PY audit/afr Stmt of Net Position Pull a report from accounting system that shows all expenditure with a 9XX object code (capital outlay) for all governmental funds for the current year Adjust expenditures not meeting capitalization policy amount to appropriate object code other than 9XX. Add remaining current year 9XX object code expenditures & donated capital assets to depreciation schedule Create a list of all deleted capital assets and note whether they were junked, sold and for how much, or traded in and trade in value in the current year

18 6th Step 7 th Step 8 th Step 9 th Step 10 th Step Remove current year deleted capital asset cost and accumulated depreciation from depreciation schedule Adjust General Fixed Asset Account Group fund, #9000 account balances to agree with depreciation schedule ending balances

19 1 st Step 2 nd Step 3 rd Step 4 th Step 5 th Step Agree ending balances per prior year depreciation schedule to amounts reported in PY audit/afr Stmt of Net Position- Proprietary Funds Pull a report from accounting system that shows all expenses with a 9XX object code for all Proprietary funds for the current year Adjust expenses not meeting capitalization policy amount to appropriate object code other than 9XX. Add remaining current year 9XX object code expenses & donated capital assets to the funds depreciation schedule Create a list of all current year capital asset deletions, their cost, and accumulated depreciation. Note whether they were junked, sold and for how much, or traded in and trade in value in the current year

20 6th Step 7 th Step 8 th Step 9 th Step 10 th Step Remove current year deleted capital asset cost and accumulated depreciation from funds depreciation schedule Make an adjusting entry to reverse 9XX (capital outlay) expenses and capitalize DR-capital asset classification CR-9XX expense in fund. Make adjusting entry to post current year depreciation expense in fund DR-depreciation expense CR-accumulated depreciation Make adjusting entry to remove capital asset cost and accumulated depreciation for current year capital asset deletions and gain/loss on sale of capital asset, if applicable Agree fiscal year ending capital asset and accumulated depreciation accounts in fund per accounting system to depreciation schedule

21 One Review all bills received and/or paid in July and August after the fiscal year. Two Determine if service was performed or goods were received as of June 30 th. Record an account payable if amount is material. Three DR-expenditure/expense & CR-accounts payable

22 One Review dates of pay period for first gross payroll amount in July following the fiscal year. Budgeted amounts for the fiscal year are usually based on 2080 hours for full time employees. Two Three Determine wage amount applicable to hours/days worked in June. Can use percentage method. Record an accrued payroll payable if amount is material. DR-expenditure/expense & CR-accrued payroll payable

23 One Two Three Review all loan payments, excluding those made monthly, due and expected to be paid in following fiscal year. Determine percentage of interest portion of payment is applicable to current year. Record an accrued interest payable if amount is material. DR-expenditure/expense & CR-accrued interest payable

24 EXPENDITURE/EXPENSE ACCRUALS & BUDGETS BUDGET TO ACTUAL REPORTS SHOULD BE REVIEWED AFTER RECORDING EXPENDITURE ACCRUALS TO DETERMINE IF A BUDGET AMENDMENT IS NECESSARY IN GOVERNMENTAL FUNDS.

25 Long-Term Debt Lead Sheet Final Loan Ending Balance Repayment Origination Interest Term of Maturity Amount Per Accounting System New Principal Interest Balance Fund Description Date Rate Debt Date Authorized June 30, 2013 Borrowing Reductions Payment June 30, Intercap- Fire Truck 5/18/ % 20 yrs 5/18/31 256, , (12,800.00) (1,034.79) 204, Water Series 2001A 9/4/ % 20yrs 9/4/21 $ 1,543, , (89,000.00) (22,934.78) 796, Sewer SRF "D" 9/20/ % 20yr 7/1/32 $ 751, , (14,000.00) (13,248.16) 628, ,102, (101,800.00) (23,969.57) 1,000, Per prior year audit report 1,102, Difference -

26 1 st Step 2 nd Step 3 rd Step 4 th Step 5 th Step Agree ending balances per prior year audit/afr Stmt of Net Position to PY ending amounts reported in General Long-term Debt Account (Fund 9500) Pull a report from accounting system that shows all expenditure with a 610 & 620/630 object codes (principal, interest & agent fees pmts) for all governmental funds recorded in current year Obtain supporting documentation from all lenders verifying payment amounts posted to principal, to interest, and new borrowings for the fiscal year, and principal balance owing as of June 30 th. Compare amounts reported by lenders to principal, interest/ agent fees, & proceeds from longterm debt amounts recorded on accounting system. Make adjustments between principal, interest, agent fees, and verify proceeds from longterm debt amounts on accounting system, if necessary.

27 6th Step 7 th Step 8 th Step 9 th Step 10 th Step Adjust General Long-term Debt Account Group fund, #9500 balances to agree with ending principal balances per LTD schedule. Note principal amounts due in the following fiscal year on the LTD schedule.

28 1 st Step 2 nd Step 3 rd Step 4 th Step 5 th Step Agree ending balances per prior year audit/afr Stmt of Net Position- Proprietary Funds to PY ending amounts reported in fund. Pull a report from accounting system that shows all expenditure with a 610 & 620/630 object codes (principal, interest & agent fees pmts) for all business-type funds recorded in current year Obtain supporting documentation from all lenders verifying payment amounts posted to principal, to interest, and new borrowings for the fiscal year, and principal balance owing as of June 30 th. Compare amounts reported by lenders to principal, interest/ agent fees, & proceeds from longterm debt amounts recorded on accounting system. Make adjustments between principal, interest, agent fees, and verify proceeds from longterm debt amounts on accounting system, if necessary.

29 6th Step 7 th Step 8 th Step 9 th Step 10 th Step Adjust Longterm debt balances in fund to agree with ending principal balances per LTD schedule. Note principal amounts due in the following fiscal year on the LTD schedule.

30 1 st Step 2 nd Step 3 rd Step 4 th Step 5 th Step Agree ending balances per prior year audit/afr Stmt of Net Position to PY ending amounts reported in General Long-term Debt Account (Fund 9500) Pull a Compensated Absence report from accounting system as of June 30 th. Adjust General Long-term Debt Account Group fund, #9500, compensated absence payable account amount to agree with report balance, all governmental funds, as of June 30 th.

31 1 st Step 2 nd Step 3 rd Step 4 th Step 5 th Step Agree ending balances per prior year audit/afr Stmt of Net Position- Proprietary Funds to PY ending amounts reported in fund per accounting system. Pull a Compensated Absence report from accounting system as of June 30 th. Make adjusting entries to record the current year increase/ decrease in compensated absence payable. DR/CR Compensated absence payable DR/CR wage expense

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33 1 st Step 2 nd Step 3 rd Step 4 th Step 5 th Step Agree ending balances per prior year audit/afr Stmt of Net Position to PY ending amounts reported in General Long-term Debt Account (Fund 9500) Refer to alternative method or actuarial calculation to determine current year OPEB expense and liability increase Adjust General Long-term Debt Account Group fund, #9500, OPEB payable account amount, to agree with calculated amount applicable to all governmental funds, as of June 30 th.

34 1 st Step 2 nd Step 3 rd Step 4 th Step 5 th Step Agree ending balances per prior year audit/afr Stmt of Net Position- Proprietary Funds to PY ending amounts reported in fund. Refer to alternative method or actuarial calculation to determine current year OPEB expense and liability increase Make adjusting entries to record the current year expense and increase in OPEB liability DR -wage expense CR OPEB liability

35 OTHER PROCEDURES 1) transfers in = transfers out 2) Due to other funds = Due from other funds 3) Advance to other funds = Advance from other funds Determine if a federal (single) audit is required. If yes, prepare Schedule of Federal Expenditures & Awards. Review budget to actual expenditures per governmental fund at year end to determine if budget amendment is necessary. Review prior year audit comments & findings and assure that have been addressed Restatements are explained and supporting documentation is available restatement. Assure warrant payable amounts in Payroll and Claims clearing funds = outstanding claims/payroll checks reports as of June 30 th.